BANGKOK (Reuters) - Tighter Western sanctions imposed on army-ruled Myanmar after its bloody crackdown on democracy protests will have little direct impact on the economy, the International Monetary Fund said in a report.

"The overall impact is limited because of restrictions already in place and because the new sanctions cover only a small proportion of trade," the IMF said in its annual review of the former Burma's economy.

"Nevertheless, in labour intensive sectors such as tourism and textiles, a fall in demand could also have adverse consequences on employment, even if the overall macroeconomic impact is small," the report, seen by Reuters, said.

Tourism was growing steadily until images of soldiers firing on protesters were splashed across newspapers and on television screens worldwide, prompting cancellations by tour operators.

Official newspapers said on Friday coverage of the protests had "a strong negative impact" on tourism but gave no details.

Outraged at the crackdown in which at least 15 people were killed, the United States, European Union and other Western nations tightened or announced new trade and investment sanctions.

But some Western firms such as France's Total have refused to leave, arguing it would only make matters worse.

Asian neighbours have also shunned punitive measures against the generals as Thailand, China and India compete for a slice of the former Burma's abundant gas reserves.

Higher gas sales have doubled the regime's foreign exchange reserves to $2 billion, equal to eight months of imports, said the report completed last month after an IMF visit in August.

But despite its natural wealth, the nation of 56 million people is among the poorest in Asia, with per capita GDP of $230 and pitiful spending on social services.

"IMPLAUSIBLE"

Officially, the economy grew at a galloping 12.7 percent last year, which the IMF said "appears implausible".

It estimated growth at 7 percent, driven by natural gas exports, higher agricultural output and construction projects such as the new capital, Naypyidaw.

The regime's five-year plan sees growth averaging more than 10 percent to 2010, but the IMF predicted 5.5 percent next year, dipping to 4 percent in later years.

A fiscal deficit of 4 percent of GDP, financed by printing money, would continue to fuel inflation of 20-30 percent a year, the highest in Asia, it said.

It was a shock fuel price rise that sparked protests in August which snowballed into the biggest anti-junta uprising in nearly two decades.

The United Nations' former resident diplomat, expelled for highlighting Myanmar's economic crisis, has said the generals may face another "explosive" situation if they ignored the grinding poverty that fuelled the protests.

The IMF recommended targeted subsidies to improve living standards and urged the regime to embark on economic reforms.

These included liberalising the transport and sale of farm products, which account for 40 percent of GDP, and unifying a distorting exchange rate system.

The official rate is 5.5 kyat to the dollar, a 24,000 percent premium over the market rate of 1,300 kyat to the dollar.

How much of this advice the generals will heed was unclear.

The IMF said government officials were in "general agreement" with the fund, "but need to convince the chain of command".