Myanmar’s economy is slowly regaining stability and picking up speed after a volatile 2018, according to a new World Bank report.
The Myanmar Economic Monitor projects Myanmar’s economy to grow at 6.5 percent in 2018/19. Growth continues to be broad-based, supported by the industrial and service sectors. Industrial activities revived, supported by strong performance in the garment sector and construction activities. Services remain the key driver of growth with momentum building in the wholesale and retail sector supported by reforms. However, large disparities in welfare persist across the country.
“Acceleration of the reform agenda as envisioned in the Myanmar Sustainable Development Plan, along with targeted public investments and private sector participation, will lead to a consolidation of macroeconomic stability and help Myanmar maintain its momentum and meet its long-term growth targets,” said Gevorg Sargsyan, Head of Office, World Bank Myanmar.
The report includes an analysis drawing on the Multidimensional Welfare Indicator (MDI), prepared with the government, which indicates that most of the population in Myanmar faces overlapping disadvantages, with large disparities in welfare apparent at the state, region and township level. Eighty-four percent of people faced disadvantages in one or more of the 14 indicators under the MDI, including education, employment, health, water and sanitation, housing, and assets. The MDI is being used to help target public resources and aid flows toward those who need it the most.
With growth expected to rise to 6.7 percent in 2020/21, the World Bank report projects a positive outlook for Myanmar’s economy despite a deteriorating global environment, due to accelerated implementation of reforms, infrastructure spending and investment in sectors such as wholesale and retail, insurance and banking that are undergoing liberalization. The external risks to the economic outlook include slowing global and regional growth and escalation of trade tensions and possible revocation of preferential EU market access.
Inflation is expected to stabilize at 6.6 percent in the medium term. The report notes that inflationary pressures could increase due to volatile global energy prices and the possibility that the government may increases electricity tariffs to bring them in line with the cost of power production.
“There are signs that market sentiment is rising due to the new laws being passed and starting to be implemented,” said Hans Anand Beck, Lead Economist, World Bank Myanmar. “Keeping these reforms going will be critical to continued economic momentum, for example through insurance liberalization, tax reform, and transparent investments in the power sector.”
In the power sector, the report argues that Myanmar needs to invest twice as much and implement projects three times faster to meet growing demand.
The Myanmar Economic Monitor is a biannual analysis of economic developments, economic prospects and policy priorities in Myanmar. The publication draws on available data reported by the Government of Myanmar and additional information collected as part of the World Bank Group’s regular economic monitoring and policy dialogue.
The World Bank’s engagement on Myanmar focuses on social inclusion, particularly in conflict-affected areas, in support of the country’s historic political and economic transition. With an emphasis on the importance of achieving peace and security as a foundation for inclusive and sustainable development for all communities in Myanmar, the Bank continues to provide technical and financial support, especially through high-impact projects. These focus on education, health services, access to electricity and other essential services, response to natural disasters, and inclusion of all ethnic groups and religions.
Austria: Reforms will be necessary to uphold high well-being levels
Austria stands out for its high levels of economic and social well-being. Preserving these will require reforms to improve competition in the service sector, increase access to risk capital for firms of all sizes, encourage more women and migrants into the workforce and lengthen work lives to reflect the ageing population, according to a new OECD report.
The latest OECD Economic Survey of Austria, presented in Vienna by the OECD’s Director of Country Studies Alvaro Pereira, projects GDP growth of 1.4% for 2019 and 1.3% for 2020. The 2020 projection is down from 1.6% forecast by the OECD in May, though the 2019 projection is unchanged, as recruitment bottlenecks, weakening external demand – especially from key markets Germany and Italy – and global trade tensions dampen Austria’s outlook.
The report’s key recommendations include linking the retirement age to life expectancy, which has risen steadily while Austrians are still retiring much earlier than the OECD average. The effective retirement age in Austria is notably lower than in neighbouring Germany and Switzerland. Austria’s labour participation rate is also low, especially among older women.
To increase the incentives to stay in work, the report recommends Austria do more to reduce its high levels of tax and social security on labour income, particularly for low earners, relative to most other OECD countries. This could be balanced by shifting to alternative sources of taxation such as environmental, consumption, inheritance and wealth taxes.
Reducing barriers to entry in key sectors ranging from service professions and specialist manufacturing to rail and freight transport and pharmaceutical distribution could bolster competition and economic dynamism. The small and medium-sized businesses that dominate Austria’s economy would benefit from greater access to venture capital and a better developed equity market. A reform planned by the outgoing government to address the debt-bias in the corporate tax system would help level the playing field between debt and equity financing.
The report recommends making access to quality childcare, early childhood education and all-day schooling for older children a legal entitlement throughout the country, to make it easier for new mothers to return to work and improve their career prospects. While this is a challenge given Austria’s geography, it would also contribute to more equal opportunities in the education system.
Austria has one of the highest shares of migrants in its workforce of OECD countries. This means migrants play an important role in meeting robust demand for labour yet the country also has a major challenge in trying to integrate low-skilled immigrants. Increasing the availability of language courses and adult skills training would help to address this.
The report also calls for Austria to increase its focus on environmental issues, for example by increasing carbon prices, which are low by international standards, and improving town planning to address the rising environmental impact of urban sprawl.
Greece Can Improve Its Business Climate by Replicating Local Successes
Greece has taken significant action to improve the business environment but entrepreneurs face different regulatory hurdles depending on where they establish their businesses, highlighting opportunities for cities to do better by learning from each other, the World Bank said in a new report, Doing Business in the European Union 2020: Greece, Ireland and Italy.
The report’s findings on Greece, released today, show that Greek cities are already European Union best performers in the area of starting a business, requiring only three procedures. But significant disparities in regulatory performance remain in the other four areas benchmarked: Dealing with construction permits, getting electricity, registering property, and enforcing contracts.
For example, trial time for a commercial dispute at the local first instance court varies from a year and eight months in Thessaloniki to just under four years in Athens. Developers in Larissa can obtain all necessary approvals to build a warehouse and connect it to utilities in less than 5 months, while their counterparts in Heraklion need to wait almost twice as much, the report finds.
“The Greek government is making progress on reforms to get business regulations right. The uneven performance among cities shows that there is still great potential for yielding gains in competitiveness” said Arup Banerji, World Bank Group Regional Director for the European Union. “We hope that this report will help policy makers and policy implementers coordinate their efforts at the national and municipal levels to create an environment for businesses to grow and function effectively.”
Of the six cities benchmarked in Greece–the capital Athens, along with Alexandroupoli, Heraklion, Larissa, Patra, Thessaloniki—none excels in all five areas measured. It is easier for entrepreneurs to start a business in Alexandroupoli and deal with construction permits in Larissa. Patra leads in the areas of getting electricity and registering property, but it lags behind in construction permitting and enforcing contracts. Thessaloniki stands out for its performance in enforcing contracts and is the runner-up in dealing with construction permits, but it ranks last in getting electricity.
“The six cities that we measured in the report have different strengths, which means Greece has an opportunity to make improvements overall if cities learn from each other and implement successful measures,” said Rita Ramalho, Senior Manager of the World Bank’s Global Indicators Group, which produces the report.
While rankings are relative, according to the global Doing Business 2020 report, Greece would have ranked 61st out of 190 economies – 18 positions higher than its actual rank – if Athens had replicated the good practices of the best performing Greek city in each area measured.
Lessons can be learned from cities that face the most challenges. Registering the transfer of a property title at the local mortgage/cadaster office takes 12 days in Alexandroupoli and Patra and four months in Thessaloniki. Despite this delay, Thessaloniki stands out on the quality of land administration. Thessaloniki is the only city in which not only are the cadaster survey and property registration complete, but the entire territory of the municipality has been digitally mapped. The city has a state-of-the-art website providing both spatial data infrastructure and a geographic information system (GIS) portal. These apparently contradictory results—between the lag time to register and the high quality of the registration process—are perhaps expected. Thessaloniki has made the most progress in implementing the cadaster reform and in tackling the challenges it faces managing the transition.
Doing Business in the European Union is a series of subnational reports being produced by theWorld Bank Group at the request of and funded by the European Commission. This edition also benchmarks five cities in Ireland and 13 cities in Italy, besides the six cities in Greece. The report will be published in full in December 2019. A first edition, covering 22 cities in Bulgaria, Hungary and Romania, was released in 2017. A second edition, covering 25 cities in Croatia, the Czech Republic, Portugal and Slovakia, was released in 2018.
The work on Greece, carried out with the support of the Ministry of Development and Investment (formerly the Ministry of Economy and Development), is based on the same methodology as the global Doing Business report published annually by the World Bank Group.
Oil Market Report: Pausing to reflect
The IEA’s World Energy Outlook 2019 published this week highlights the increasing disparity between the calm oil market of today and heightened geopolitical tensions. The calmness is supported by a well-supplied market and high inventories. This may continue into 2020 because non-OPEC countries will grow their production by 2.3 mb/d. The US will lead the way but there will also be significant growth from Brazil, Norway and barrels from a new producer, Guyana.
Global refinery activity is expected to rebound sharply in 2020, after a pause in growth this year. While our oil demand growth estimate for 2019 is essentially unchanged at 1 mb/d, the volume of crude oil used by refiners and for direct burn in power generation declined by 300 kb/d through 3Q19. Even after a seasonal surge in refinery runs in 4Q19, crude oil demand for 2019 as a whole is still expected to decline by 90 kb/d, the first drop since 2009. This reflects the cyclical nature of refining that overproduces in some years and then slows down to clear product stock overhang.
A ramp up in refining activity in 2020 sets the stage for a hopefully smooth implementation in January of the International Maritime Organisation’s new bunker fuel regulations. Ports, ship owners and refiners have stepped up their preparations. Major bunker hubs such as Fujairah, Rotterdam and Singapore are reported to have large volumes of compliant fuel available. In the case of Singapore, one of the world’s two Ultra Large Crude Carriers is being used to store low sulphur fuel oil (LSFO) and marine gasoil offshore. Meanwhile, the price of high sulphur fuel oil (HSFO) is nose-diving with cracks in Rotterdam falling under -$30/bbl, the lowest in over 10 years. The LSFO-HSFO spread in North West Europe blew out to almost $30/bbl in late October from just under $3/bbl last year. Nevertheless, compliant supplies may not be available in sufficient quantities in smaller ports and for smaller ships, perhaps creating some dislocations.
For 2020, our estimate for oil demand growth is unchanged at 1.2 mb/d, based partly on the International Monetary Fund’s expectation of 3.4% GDP growth. However, the health of the global economy remains uncertain in spite of recent positive news about the US-China trade dispute. This year, we are seeing a big difference in demand growth in the two biggest oil markets. In the US, there has been almost no growth in the first three quarters of 2019, while China has grown by 0.6 mb/d on average. Moving into 2020, US growth is expected to pick up to 190 kb/d while China slows to 375 kb/d.
The hefty supply cushion that is likely to build up during the first half of next year will offer cold comfort to OPEC+ ministers gathering in Vienna at the start of next month. However, a continuously well-supplied market will lend support to a fragile global economy.
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