BANGKOK (`) – Myanmar’s economy grew 3% last year and is likely to pick up the same pace in 2023, but still…
BANGKOK (`) – Myanmar’s economy grew 3% last year and is likely to pick up the same pace in 2023, but still lags far behind where it was before the army seized power in early 2021, the World Bank said in an am Report released Monday.
The Global Development Agency estimates that Myanmar’s economic activity level is still more than 10% below pre-pandemic and military takeover levels. It’s even further behind on a per capita basis, they say.
If the global economy continues to slow as expected, exports and investment could weaken after recovering somewhat from the pandemic and disruptions caused by civil wars and foreign sanctions after the army toppled Aung San Suu Kyi’s elected government would have.
The return to military control after nearly a decade of quasi-civilian rule provoked mass protests that escalated into armed revolts, adding to decades of conflict between the government and armed ethnic groups.
“Economic activity continues to be disrupted by ongoing conflicts, which are devastating to lives and livelihoods, and by power shortages,” the report said.
Myanmar’s economy shrank by about 18% in 2021 after growing at a pace of 6% or more in previous years. The slow pace of expansion over the last year from a very low base suggests conditions remain weak.
“What’s surprising is that growth wasn’t higher,” said Kim Alan Edwards, a senior economist at the World Bank, in an online briefing. “Growth is nowhere near as high as in 2019.”
Like other emerging economies, Myanmar has had to contend with a weakening of its currency against the dollar. The value of the kyat fell by about a quarter from June to December last year and is less than half the value it was two years earlier. This makes importing essential commodities such as oil much more expensive locally.
Combined with higher prices for many commodities, including oil and gas, Myanmar hit inflation by nearly 20% in July, the report said.
“While the kyat has stabilized in recent months, foreign exchange constraints persist which, combined with onerous trade restrictions, have impacted companies’ ability to supply a range of imported products,” it said.
World Bank economists said controls imposed by the central bank to support the kyat and protect foreign exchange reserves have been eased, making it easier for exporters to obtain credit or keep their profits. But many businesses and people are forced to comply with instructions to exchange foreign currency into kyats at the official rate of 2,100 kyats per dollar when the market value is around 2,800 kyats.
According to the report, agriculture and garment manufacturing have recovered, and some companies are finding ways to operate through informal payments and trade channels. The reopening of Myanmar’s trade routes with China also contributed to this.
However, risks have been increased by security issues stemming from the Civil War, which add to the cost and delays of moving goods.
“There are no easy solutions to Myanmar’s situation,” Edwards said, noting a lack of transparency that obscures what is going on. “Rules and regulations can change at any time, favoring some and not others.”
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