A top World Bank economist tells the New York Times that the nation “remains a long way short of a recovery” after the military overthrew Aung San Suu Kyi’s democratic administration last year.
“The economy is still in a state of flux,” he said.
Soaring food costs and weakening currencies are threatening the economy of numerous Asian nations, including Myanmar and Sri Lanka. With the epidemic and a February 2021 military takeover, 40% of the population is now living in poverty, despite a decade of reform and robust economic development.
It’s expected that inequality has increased, with those who were previously poor sliding farther into poverty, according to the World Bank’s most recent analysis.
Following the military’s takeover of power, there is a wide range of views on the status of the economy, which is mostly due to a lack of up-to-date information.
For the fiscal year ending September, the World Bank expects an annual growth of 3 percent, after the previous year’s 18 percent decline.
Some private sector economists are more pessimistic about the economy.
The growth rate for the current fiscal year is estimated by Fitch Solutions to be -5.5%, with the following year’s growth rate expected to be 2.5%. An economic recovery to pre-pandemic levels is expected to take at least another six years.
Most of the last 70 years have seen the military in charge of Myanmar. Disrupted a peaceful transition to democracy and an open, modern economy by taking over the government and drawing a series of penalties on the military, which owns numerous businesses.
Many foreign-owned enterprises have pulled out, including big oil firms like France’s Total SA and Norway’s Telenor.
According to Edwards, the manufacturing sector has regained some of the losses it suffered during the breakout of coronavirus and the enormous anti-military rallies that followed the military’s takeover. Workers, on the other hand, are working fewer hours and earning less money.
Meanwhile, he added, banks now have greater access to cash than they had in the months immediately after the army’s takeover, although credit is still short.
Since the latest official figures on Myanmar’s foreign currency reserves were released in late 2020, the actual condition of the country’s reserves remains unknown. Sanctions imposed by the United States are believed to have blocked $1 billion in assets.
“It’s pretty probable that the reserve position has worsened quite substantially,” Edwards said, given the loss of tourist income, reduced export profits, and rising expenses for imports of oil and gas and supplies required for industry.
However, he said that while he didn’t believe Myanmar’s reserves had fallen to the same extent as those in Sri Lanka, where the economy has collapsed, causing a political upheaval, as the country has run out of funds to pay for essentials such as food, fuel, and medicine, there is a lack of clarity about what is going on.
Burmese firms have been ordered by the central bank to deposit any hard cash, particularly US dollars, into banks and convert it to the native currency, kyats, at considerably lower rates.
Myanmar’s most impoverished citizens, particularly those who live in rural areas where armed civilian resistance forces are battling the army, bear the brunt of the crisis.
As many as 20% of firms questioned by the World Bank claimed the violence was their largest obstacle, while 40% of agricultural enterprises said the same.
However, a 70% increase in gasoline prices, as well as increased fertiliser and transportation expenses, are also having an effect, according to the report.