Myanmar‘s economy is forecast to grow only 1% in the fiscal year that ends in March, the World Bank says, as conditions deteriorate with an escalation in fighting between the military and its opponents that has newly displaced more than 500,000 people.
Intensified fighting near Myanmar’s border with China has blocked trade routes, causing shortages of food and other necessities and worsening inflation that was already near 30%, the World Bank said in a report Tuesday.
Myanmar is embroiled in widespread conflicts that deepened and expanded after the military’s seizure of power from the elected government of Aung San Suu Kyi in early 2021 prompted a wave of popular resistance.
The total number of people displaced by fighting has risen to some 2.5 million, the report said.
Political instability coupled with the pandemic and mismanagement by the military leadership have undone years of economic progress, the report said. It said the military administration’s efforts to attract foreign exchange and stabilize Myanmar’s currency, the kyat, have “generally been ineffective,” causing uncertainty and distorting markets.
The forecast for 1% growth suggests the economy will be about 10% smaller in 2024 than it was five years earlier.
“At the same time, a lack of clarity around the implementation and enforcement of frequently changing and often non-transparent instructions has raised uncertainty and increased compliance costs,” it said.
The report said power outages were affecting both homes and businesses, with costs for running generators during blackouts causing garment manufacturers losses amounting to nearly a third of their sales in 2022. That is undermining one of the country’s most important drivers for growth and exports.
“With the operating environment deteriorating and uncertainty about the future increasing, Myanmar’s garment firms have been forced to focus on survival rather than investment and growth,” Kim Alan Edwards, the World Bank’s program leader and senior economist for Myanmar, said in a statement.
Among other developments mentioned in the report:
— A survey in September found that companies said they were operating at less than 60% of capacity, down from 75% in April.
Average household incomes fell by 10% in the April-June quarter compared with a year earlier.
— Tourism has failed to recover despite government efforts to lure back visitors, with several international hotel chains remaining closed.
SOURCE – INDEPENDENT