Myanmar’s economy is down but may recover slowly

According to a new report released by the World Bank, Myanmar’s economy is predicted to grow by 3% by the end of the current fiscal year. However, the report, titled “Myanmar’s Economic Monitor: Navigating Uncertainty,” states that the risk factors outweigh the positive aspects of Myanmar’s economic recovery.

The country has been facing turmoil since the military staged a coup two years ago, which has been met with widespread protests and opposition. The junta’s crackdown on opposition has fueled an armed resistance movement, leading the conflict in the country to resemble a civil war. The World Bank report outlines the devastating impact that the ongoing conflict has had on Myanmar’s economy, causing disruptions and impacting lives and livelihoods.

Myanmar’s businesses have highlighted the volatile exchange rate as the main economic difficulty, along with foreign currency shortages and ongoing trade restrictions. The coup has triggered sanctions from Western countries, and the ongoing unrest has discouraged foreign investors from doing business in Myanmar. This has resulted in a weak domestic market for businesses, making it difficult to turn a profit.

Kim Alan Edwards, an economist at the World Bank and one of the authors of the report, stated that the unstable policymaking structure hampers business confidence, making it hard for businesses to plan for the future and reducing investment incentives. Until this situation changes, the potential growth of the economy is likely to remain weak.

The report also mentions that the Myanmar kyat lost a quarter of its value to the U.S. dollar for a time in the second half of 2022 due to elevated commodity prices and logistic constraints. This depreciation led to a rise in inflation, which reached over 20% until July of last year.