Inflation has subsided since 2008, when it exceeded 20%. This follows
reduced monetization of the fiscal deficit and a stronger kyat exchange
rate on the unofficial market. The consumer price index fe...
ll in early
FY2012, due to declining food prices. By December 2012, though, food
prices were rising and inflation was 6.0% year on year (Figure 3.27.3).
The consolidated fiscal deficit of the central government and state
economic enterprises narrowed to an estimated 5.4% of GDP in FY2012
from 6.0% a year earlier. Revenue benefited from the government’s
realignment in April 2012 of the (fixed) official exchange rate of the kyat,
bringing it closer to the unofficial market exchange rate. As state enterprises
are net exporters, the exchange rate revaluation boosted budget receipts,
including export tax income and customs duties. Higher revenue enabled
the government to increase spending on health, education, and capital
In external accounts, the current account deficit widened to an
estimated 4% of GDP, with the trade balance in deficit owing mainly to
a gradual liberalization of imports and higher investment. Customs data
show a 3.6% decline in exports in April–December 2012 from a year earlier,
likely caused by subdued demand in Thailand, the People’s Republic of
China, and India, as well as weaker international commodity prices.
Exports of natural gas, which comprises 38% of total exports, were
flat, and agricultural exports mostly declined in April–December.
Garment exports rose by 18% year on year, benefiting from greater access
to global markets and low domestic wages. The general weakness in total
exports underscores the importance of sharpening competitiveness with
higher investment, new technologies, and improved access to finance, as
well as an appropriate exchange rate. The kyat has appreciated in nominal
and real terms over the past few years.
Source: Central Statistical Organization
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