Myanmar : Monthy Inflation

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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 fell 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 investment. 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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