Review of Myanmar’s economic performance using time-series data

The time-series data for the review cover the whole of Myanmar’s post-independence era—57 years, from independence in 1948 to the fiscal year 2005/06, the last year for which data were available. For convenience and ease of presentation, data are presented in Appendix Tables 4.3–4.8, with each covering a decade: the 1950s, 1960s, 1970s, 1980s, 1990s and the first decade of the new millennium. What they reveal is highlighted below.

Double-digit real GDP growth, 1948–2005

Sustained double-digit growth in real GDP began in the fiscal year 1999/2000 and continued for seven years up to 2005 (and could continue for several years more). Such sustained double-digit growth represents a sharp break with the country’s development experience in its entire post-independence period, extending across half a century. Until 1999/2000, which ushered in the new millennium, there had never been double-digit real GDP growth that extended across two consecutive years.

During the 50 years since independence, there have been five instances of double-digit GDP growth: twice in the 1950s (1950 and 1956) and three times in the 1960s (1962, 1964 and 1967). In all these instances, a double-digit growth year has always been either immediately preceded by or immediately followed by a negative-growth year. For instance, real growth of 12.9 per cent in 1950 was preceded by a 10 per cent real GDP decline in 1948 and a further 5 per cent fall in 1949. Similarly, 13 per cent growth in 1962 was followed by a decline of 6.1 per cent in 1963. For three decades preceding the fiscal year 1999/2000, there had not been a single instance of double-digit real GDP growth.

Real GDP growth and the GDI/GDP ratio, 1948–2005

Table 4.1 summarises how real GDP growth and the GDI/GDP ratio have changed in Myanmar in the past five decades and in the early years of the new millennium.

Table 4.1 Myanmar: real GDP growth rates and the GDI/GDP ratio, 1950/51–2004/05

Fiscal years

Average GDP growth rate (%)

Average GDI/GDP ratio (%)

1950/51–1959/60

5.8

18.9

1961/62–1970/71

3.5

12.2

1970/71–1979/80

3.9

12.8

1980/81–1989/90

1.9

16.1

1990/91–1999/2000

6.1

13.6

1999/2000–2004/05

12.6

11.8

From Table 4.1, we can say that in the 1950s, Myanmar was not a least-developed country, and, with a GDI/GDP ratio of 19 per cent, it achieved an average annual growth rate of about 6 per cent.

In the next two decades (the 1960s and 1970s), as a consequence of command-style economic management under military rule, self-imposed isolation and the ‘Burmese way to socialism’, the economy deteriorated. Real GDP growth was reduced to 3–4 per cent per annum, while the GDI/GDP ratio fell to between 12 and 13 per cent.

The 1980s were, economically, the worst in Myanmar’s post-independence history. Although the decade started off well with real GDP growing between 5 per cent and 8 per cent and the GDI/GDP ratio reaching 21–22 per cent, the political turmoil and social disturbances in the latter half of the decade overshadowed the good beginning. For the decade as a whole, therefore, GDP growth averaged only 1.9 per cent per annum—slightly below the 2 per cent growth in population. The GDI/GDP ratio, however, remained relatively high for this period, averaging 16 per cent per annum (Appendix Table 4.7). We could also recall that in 1987, Myanmar applied for and was granted ‘least-developed country’ status by the United Nations and, in 1988, a new regime came to power that abandoned the ‘Burmese way to socialism’ and adopted a ‘market-oriented’ approach for the country to become a ‘modern developed nation’.

A claim could be made that economic reforms in the first half of the 1990s enabled the country to attain a respectable 6 per cent growth in this decade. This better performance has, however, been achieved with a relatively stagnant GDI/GDP ratio of about 13 per cent.

What conclusion can be drawn, then, regarding Myanmar’s growth experience from independence in 1948 up to the end of the 1990s? If we wish to be unkind, we can say that Myanmar is a subsistence agricultural economy, relying on a few commodities, with a pre-industrial economic structure, which has no shock absorbers to cushion the impact of events originating within and outside the country. Natural and human-made disasters, therefore, windfalls from the bounty of nature and commodity booms that resulted from such events as the Korean War largely determined the state of the economy, rather than factors such as the GDI/GDP ratio.

Such unkind views can, however, no longer hold with the official data for Myanmar’s economic performance coming into the new millennium. In biblical times, it was possible for a country’s economy to enjoy seven fat years in a row and then to suffer seven lean years in a row. Not anymore! Global warming, a growing menace, has brought with it climate change that has made weather volatile and erratic. There is no way a country can expect to have seven consecutive years of good harvests in the twenty-first century. The fact that real GDP growth in Myanmar doubled from 6 per cent in the 1990s to 12 per cent at the start of the new millennium, and that this double-digit growth was sustained for seven years while the GDI/GDP ratio fell to 11–12 per cent, deserves some explanation. There are probably two reasons for this: politics and arithmetic.

Regarding politics, the powers that be in the country have a fixation with high GDP growth rates, which are believed to indicate the country’s growing prosperity and wellbeing. These growth rates have therefore become highly politicised and, in the process, credibility and good sense have fallen by the wayside.

As for arithmetic, social and economic indicators for the country are normally expressed as a ratio of GDP. Now, when the GDP that is used as a denominator in these indicators is padded, inflated and made to rise proportionately more than the numerator, this will introduce a downward bias to the indicators. It is therefore not surprising that an unusually high real GDP growth rate, as reflected in official national account statistics, in the new millennium has led to a fall in the GDI/GDP ratio. This also accounts for the pathetically low export/GDP ratio and industrial value added/GDP ratio, as well as many other social and economic indicators, which are embarrassingly far below such indicators in other countries in the region.

This has not always been the case in Myanmar’s post-independence history. For instance, Table 4.2 provides the ratio of exports to GDP for the 1950s, when the country did not suffer from politically inspired GDP figures. This ratio averaged 22.6 per cent per annum for the decade, which was consistent with such ratios for any country in the world judged to be in a similar economic situation as Myanmar at that time.

Table 4.2 Myanmar: GDP, exports and the export/GDP ratio, 1950/51–1959/60 (million kyat, current prices)

Fiscal year

1950/

1951

1951/

1952

1952/

1953

1953/

1954

1954/

1955

1955/

1956

1956/

1957

1957/

1958

1958/

1959

1959/

1960

Total

Average

GDP

3690

4084

4620

4589

4813

5144

5452

5384

5626

5999

49 401

4940

Exports

975

1093

1292

1066

1116

1174

1183

894

1002

1179

10 974

1097

Exports/GDP (%)

26.42

26.76

27.97

23.23

23.19

22.82

21.70

16.60

17.81

19.65

226

22.62

Source: Government of Burma, Economic Survey of Burma, 1955, 1959 and 1963.

The same exercise reported in Table 4.2, using official figures for the new millennium, yields Table 4.3, with an export/GDP ratio reduced to 0.44 per cent—a percentage that will take us back to a pre-colonial and pre-industrial era, definitely before King Mindon’s reign (1853–78), when Myanmar had little regular commerce with the outside world.

Table 4.3 Myanmar: GDP, exports and the export/GDP ratio, 2000/01–2002/03 (million kyat, current prices)

Fiscal year

2000/01

2001/02

2002/03

Total

Average

GDP

2 552 733

3 548 472

5 527 000

11 628 205

3 876 068

Exports

12 627

16 350

19 955

48 932

16 311

Exports/GDP ratio (%)

0.49

0.46

0.36

1.31

0.44

Source: Central Statistical Organisation, Statistical Yearbook 2003: Table 14.02, p. 315.