Myanmar’s economy shows no signs of recovering from the 2021 military coup, as civil war drives more workers abroad, pushes inflation into triple digits in some parts of the country and pulls it deeper into poverty, a new World Bank report says.
“Livelihoods Under Threat,” launched Wednesday in Myanmar, says the economy shuffled along over the past year with gross domestic product growing at a meager 1%. The same is expected for next year.
While staving off recession, slow growth still leaves Myanmar’s once-booming economy 10% smaller than it was before the country’s military ousted the democratically elected government more than three years ago.
Resistance groups have made major battlefield gains against the junta since late last year and are believed to control more than half the country, including some key border trade routes.
“The overall storyline is that the economy remains weak and fragile overall. Operating conditions for businesses of all sizes and all sectors remain very difficult,” World Bank senior economist Kim Edwards said at the report’s launch.
The bank says overall inflation rose some 30% in the year leading up to September 2023, and even more in areas where fighting has been fiercest.
“You can see in the conflict-affected states and regions — Kayin, Kachin, Sagaing, northern Shan, Kayah — price rises of 40 to 50%,” Edwards said.
“And then in Rakhine, where … there’s been particular problems and increasing conflict recently, we’ve seen price rises of 200% over the year. So, very substantial. And obviously, it has very significant effects for food insecurity,” he said.
The United Nations’ World Food Program says food insecurity now plagues a quarter of Myanmar’s 55 million people, especially the more than 3 million displaced by the fighting.
In Wednesday’s report, the World Bank also estimates that nearly one-third of the population now lives in poverty.
“And we see the depth and severity of poverty. So, this is really a measure of how poor people in poverty actually are — worsening also in 2023, meaning that poverty is more entrenched than at any time in the last six years,” Edwards said.
The bank says much of the inflation is being driven by the steady depreciation of the currency, the kyat. While the official exchange rate remains stuck at 2,100 to the U.S. dollar, trading of the kyat on the black market soared past 4,500 to the dollar in May.
The junta has imposed several controls to conserve its dwindling foreign currency reserves. Last month, it urged companies doing business abroad to barter with their trade partners and settle bills with their wares instead of cash.
At the same time, the bank says border trade — a major source of tax revenue for the regime — is being hit hard by the gains the resistance has been making along Myanmar’s frontiers with China, India and Thailand. It says imports and exports by land fell 50% and 44% respectively, in the past six months.
The junta has leaned heavily on oil and gas revenue, but with little investment for exploration of new reserves, those exports are likely to start falling in the coming years, as well, Edwards said.
More of what the junta does earn is going to the military at the expense of other basic services. According to the report, defense spending hit 17% of the national budget in the fiscal year that ended in March, nearly twice what was spent on health and education combined.
Encouraging news
The World Bank says manufacturing and agriculture output in Myanmar have started to pick up, and a combination of cheaper fertilizer and higher crop prices could keep the farming sector growing.
Traders stymied by blocked border gates also seem to be shifting some of their traffic to new routes on land and sea.
“There are some signs of life,” Edwards said. “And these really speak to the adaptability of many of Myanmar’s businesses and their ability to cope with what, under any objective circumstances, are very difficult business constraints and conditions.”
Even so, Edwards said, “The near-term outlook remains quite weak, with the economy failing to recover from its recent, very sharp contraction.”
Htwe Htwe Thein, an associate professor at Australia’s Curtin University who has been studying Myanmar’s business and economic development for two decades, said she could not recall a worse time for Myanmar’s economy.
“The state of the economy has never been this low in terms of prospects, in terms of … the trajectory,” she told VOA.
“The only people who are doing well … is a very, very small percentage at the top who are working with the junta,” she said. “Everybody else is suffering severely.”
Amid the fierce inflation, falling wages and dwindling job prospects, Thein said, the young are losing hope and grasping at any opportunity to work or study abroad.
She added that the junta’s efforts to shore up the economy have been ad hoc and short-sighted, and that rebuilding will take years and can only be achieved if and when the junta is out of power.
