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Cambodia, Laos and Myanmar Business Forecast Report Q3 2011
South East Asia's frontier economies have held up relatively well in
spite of a weak economic recovery in the US , fiscal austerity in the
eurozone and negative spillover effects from the Japan earthquake.
The
Association of Southeast Asian Nations (ASEAN )'s drive to establish an
ASEAN Community by 2015 is expected to support economic growth for
Cambodia, Myanmar and Laos through increased trade and foreign direct
investments (FDI ) over the coming years. China is also becoming a key
source of FDI for Myanmar, Cambodia and Laos in recent years and we
expect this to continue. Accordingly, we have upgraded our economic
growth outlook on Cambodia and Myanmar to reflect resilient momentum
behind these economies.
We are seeing encouraging evidence that
Cambodia's economic recovery remains on track and real GDP growth could
soon return to long-term trend growth of around 6.0-7.0%. The
government's new rice production and export policy is expected to
support growth in the agricultural sector, while a positive outlook for
the country's key trading partners suggests that demand for exports
should remain resilient. Latest trade figures and economic data
published by the Ministry of Commerce and the Ministry of Economy and
Finance also point towards a steady recovery in economic activity this
year. Accordingly, we have revised Cambodia's real GDP growth upwards
from 3.4% to 4.5% for 2011.
Laos is expected to attract a record
amount of FDI inflows this year as several large scale infrastructure
projects are set to commence construction over the coming months.
Despite an impressive surge in FDI inflows in 2010, we are maintaining a
cautious outlook on Laos's real GDP growth in 2011 as prevailing global
economic headwinds continue to cloud the outlook for FDI inflows and
exports. Although we remain positive towards the surge in FDI , we warn
that large foreign capital inflows could potentially result in
inflationary pressures due to a sudden pick-up in demand for labour and
construction materials over the coming quarters.
Major political
and economic developments in recent months suggest that the tables are
finally beginning to turn in favour of Myanmar's economy. On the
political front, we expect a strategic political alliance between
Naypyidaw and Beijing to help boost Myanmar's political influence in the
region. On the economic front, we expect FDI inflows from China and
ASEAN to keep the economy growing at a robust pace over the coming
years. In light of these positive developments, we have upgraded our
2011 real GDP growth forecast to 6.0% from 4.0% previously. Over the
longer term, we also expect Myanmar's economic growth to average at a
more robust pace of 5%, compared to 4.0% previously.
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