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The political stalemate in Myanmar leaves the economy in tatters | Us world news

The military takeover in Myanmar has set its economy back years, if not decades, as political unrest and violence disrupt banking, trade and livelihoods, and slide millions deeper into poverty.

The Southeast Asian country was already in recession when the 2020 pandemic broke out and crippled its lucrative tourism sector. Political unrest following the overthrow of civil government by the army on February 1st has plunged the 62 million people who are forced to pay sharply higher prices for food and other goods as the value of the kyat, the local currency, falls.

There is no end in sight to the political impasse, and the outlook for the economy is bleak.

United Nations humanitarian chief Martin Griffiths last week  -pealed to Myanmar military leaders to provide unhindered access to more than 3 million people who are receiving “lifesaving” aid “due to growing conflict and insecurity, COVID-19 and a weakening economy” require.

Griffiths said he was increasingly concerned about reports of increasing food insecurity in and around cities.

Hundreds of thousands of people have lost their jobs in the country and poverty has worsened as inflation skyrocketed in Myanmar.

“Imported food and medicines cost twice as much as before. . . so people only buy what they need to buy. And if merchants sell an item for 1,000 kyat one day and 1,200 the next, it means the seller is losing on the sale, ”said Ma San San, a merchant in Mawlamyine Township who sells Thai goods.

According to the Asian Development Bank, Myanmar’s economy is expected to contract 18.4% in 2021, one of the strongest contractions in recent times.

The civilian government, which was overthrown in February, had made slow but steady progress towards integrating impoverished Myanmar into the world economy after decades of quasi-isolation under previous military regimes. Exports rose in the past decade after the generals eased their decades-long seizure of power. In order to attract young and inexpensive workers, foreign investors set up factories to manufacture clothing and other light goods.

Yangon, the former c -ital and largest city, was transformed when decaying British colonial buildings were polished up or demolished, making way for new streets, industrial areas, shopping malls and modern housing. Private companies emerged, created jobs and met the long-time disadvantaged demand for products such as cell phones and new cars.

But the military still controlled key government ministries and many industries, and corruption and nepotism flourished. Months after the political crisis in Myanmar, the country has returned to the days of black market trading and dollar hoarding.

“Now most people are losing faith in the Myanmar currency and buying dollars and prices are soaring,” said Soe Tun, chairman of the Myanmar Automobile Manufacturers and Distributors Association and an official of the Myanmar Rice Association.

Trade has been hampered by both the global scarcity and rising cost of shipping containers and the closing of China’s border to exports from Myanmar to contain coronavirus outbreaks.

Myanmar’s total trade has declined 22% year over year in the 10 months from October 2020 to July 2021, Senior General Min Aung Hlaing, who led the army takeover, recently told his military-installed cabinet. He said the country had a trade deficit of $ 368 million.

The less Myanmar exports, the less it earns in foreign currency – mainly dollars – which makes the greenback all the more scarce and valuable compared to the kyat.

In January, the dollar bought 1,300-1,400 kyats. It hit a record high of 3,000 kyat among money changers on Shwebontha Street in downtown Yangon, informally known as Broker Street, in late September.

This has driven up the prices of kyats for commodities like cooking oil, cosmetics, groceries, electronics, fuel, and other increasingly expensive goods that must be imported with dollars.

The authorities have suspended vehicle imports from October 1 to protect foreign currency. To cushion the fall in the kyat, the Central Bank of Myanmar has intervened 36 times in the market since February. But such operations had little impact, traders say, since most of the dollars the central bank sells go to pro-military corporations.

“Some say that the dollars spent by the central bank do not meet domestic demand, and we accept that it is true,” Major General Zaw Min Tun, the military administration’s chief spokesman, told reporters.

“As a government, we need to take responsibility for what h -pened in our time rather than blaming the past,” he said. “I want to say that our government is working hard to find the best solution.”

Some people have set up money-changing groups to exchange kyats for dollars online despite the risks, and the central bank recently issued a notice banning such unofficial dealings.

“Online is easier these days. You can easily find people who want to buy or sell. But you need to build trust between sellers and buyers. There are also online fraudsters, ”said Ko Thurein, who often posts dollar sales at the Myanmar Money Changer Group.

Fuel shortages have become a major problem. Thanks in part to rising oil prices around the world, the cost of gasoline, which is imported as Myanmar has scarce refining c -acity, more than doubled from around 700 kyat in January to a record of around 1,500 kyat per liter.

Zaw Min Tun, the military’s spokesman, said Myanmar was working on long-term hydropower and wind power projects, trying to conserve energy and cut imports because it “cannot meet fuel needs”.

The top politician Min Aung Hlaing has urged the public to help reduce energy consumption.

“Dollars are difficult to buy and oil companies are no longer selling us on credit,” said an official with Max Energy, a large conglomerate that operates dozens of gas stations. “You can’t buy everything you want and we have a hard time building trust. That’s why we’re just trying not to lose too much at the moment. “

He blamed the political crisis. “Even in our country, people don’t trust each other, and there is no doubt that foreigners don’t trust us. This is also because the banking system is in turmoil, “said the official, who spoke on condition of anonymity given the sensitivity of the issue.

“Gasoline prices have skyrocketed, so we need to raise prices. But the passengers don’t want to pay. I know everyone is impoverished right now, so people use buses instead of taxis, ”said Moe Myint Tun, a taxi driver in Yangon. “When we have high fuel prices, we lose a lot of passengers.”

As with many other modern conveniences, banking services have been regularly interrupted by protests and strikes, forcing people who want to access their cash to use mobile banking  -ps and in so-called pay money shops that offer financial services, 5% to 5% 7% fees payable.

“Inflation automatically depreciates the value of the money in our hands. As soon as the money cannot be withdrawn from the bank, we have to pay a commission in the Pay Money Shops. We finally run out of things, “said Su Yee Win Aung, a saleswoman at a telecommunications company in Yangon.

“You can say it’s the most difficult time for us,” she said.

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