Exports Manage Tepid Growth Following Steep Drop: EIU

(Irrawaddy)
Burma’s exports recorded modest positive growth in the first ten months of last year, despite a dramatic year on year decline of 14.1 percent in the period from January to September 2008, according to the latest report by the Economist Intelligence Unit (EIU), an independent think tank.

The EIU’s March 2009 report on Burma shows that the country’s exports managed to grow at a rate of 0.3 percent year on year in the period from January to October 2008, to 30.5 billion kyat (US $25.7 million).

The report attributes most of this growth to “a surge in exports in the ‘others’ category (which includes exports of gems and jade),” which were valued at 3.5 billion kyat ($2.95 million) in October.

Despite the overall improvement, however, demand for natural gas, Burma’s largest export, and other commodities remains weak due to the global economic downturn.

Sales of natural gas to Thailand, currently the only market for Burma’s energy exports, fell 22.1 percent year on year in value terms in January-October 2008, according to the EIU report. This follows a drop of 32.7 percent for the period from January to September.

Other exports were also down in January-October: Pulses fell by 8.3 percent, hardwoods by 4.5 percent and garments by 3.6 percent. According to an EIU report published in February, overseas orders for fish had fallen by 50 percent year on year in the first nine months of the current fiscal year.

The report also indicates that inflation has slowed slightly, from 26.2 percent year on year in September to 25.1 percent in October. The report attributes the slight easing of inflation to reduced food costs following a dramatic spike after Cyclone Nargis struck last May.

Globally, falling energy prices have also served to lower inflation rates, although in the case of Burma, “the reduction [in oil prices] does not appear to have been passed on to consumers through reduced transport and other costs.”

The EIU report also shows that the Burmese junta’s tax revenue rose by 40.2 percent in the first half of the current fiscal year, which ends on March 31. However, the junta is expected to continue to run large fiscal deficits.

Most of the spending will be on “large projects that provide benefits to the military and its leaders,” the report says, while “the high cost of rebuilding [in the cyclone-stricken Irrawaddy delta] is likely to be borne mainly by international donors.”