Asia's latest frontier market, Myanmar, is poised for huge economic growth in the years ahead, according to a new study by the McKinsey Global Institute (MGI), that forecasts its economy could quadruple to about $200 billion in 2030 from $45 billion in 2010.
Currently, the country's gross domestic product (GDP) is just 0.2 percent of Asia's GDP – or about the size of cities such as Delhi and Johannesburg.
"For much of the 20th century, Myanmar largely missed out on the spectacular growth seen across most of the global economy and most recently in its Asian peers. It now has the potential to be one of the fastest-growing economies in emerging Asia," said Richard Dobbs, a director of McKinsey & Company and MGI.
The resource rich Southeast Asian nation, which embarked on political and economic reform only in 2011, has since seen a lot of interest from investors looking for growth.
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Foreign investment into the country was almost 5 times higher in the fiscal year that ended in March 2013 compared to the previous year, Reuters reported.
Going forward Myanmar's growth will be driven by a few sectors that include energy and mining, agriculture, manufacturing and infrastructure – together they account for over 85 percent of the country's total economic potential, according to the report.
Of these, manufacturing is by far the most important and could leverage the opportunity of companies relocating from China and other Asian countries because of rising wages in these economies.
In contrast, Myanmar's labor costs remain low, providing an opportunity to develop labor-intensive sectors such as textiles, apparel and furniture.
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According to McKinsey data, manufacturing in Myanmar accounted for $9.8 billion of total GDP in 2010 and is estimated to grow to $69.4 billion by 2030.
The report also points out that, with rising incomes, there is potential to grow the consumer class in the country of some 60 million people.
"As the number of consumers with income for discretionary spending potentially rises from 2.5 million today to 19 million in 2030, consumer spending could triple from $35 billion to $100 billion," says Heang Chhor, senior partner, McKinsey & Company.
The report, however, points out that Myanmar's future success depends on whether this new democracy can maintain political stability and continue with economic reforms.
"To support this higher growth rate, Myanmar has to get all the fundamentals right— political and macroeconomic stability, the rule of law, and enablers such as skills and infrastructure," according to the report.
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