Myanmar economy to remain ‘severely diminished’ amid conflict: World Bank

Myanmar's gross domestic product is expected to increase just 3 per cent in the fiscal year to September, the World Bank said. PHOTO: AFP

WASHINGTON – Myanmar’s economic growth remains “severely diminished” and gross domestic product (GDP) is expected to increase just 3 per cent in the fiscal year to September, the World Bank said on Friday, as the country remains embroiled in conflict two years after the military seized power in a coup.

Widespread violence, worsening power shortages and policy failures will continue to disrupt an economy already crippled by political and social turmoil, the World Bank said in a regional report.

“The business environment is unlikely to improve materially while electricity shortages, logistics disruptions, trade and foreign exchange restrictions, and regulatory uncertainty persist,” the report said.

Myanmar’s army ousted an elected government in 2021, unleashing chaos as it sought to crush its opponents.

Its crackdown on dissent and the ensuing backlash from armed groups have led to a retreat by foreign firms concerned about political risks, sanctions and damage to their reputation.

The World Bank said Myanmar’s economic output will remain well below levels seen in 2019, even as the rest of the East Asian region rebounds from pandemic-era lows.

Myanmar’s GDP contracted about 18 per cent in 2021, before growing 3 per cent in 2022, according to the World Bank.

The report said households faced severe pressure due to lower purchasing power and higher food and fuel prices, with the kyat currency plunging around 31 per cent against the US dollar.

It also said there has been a shift in the past year from a managed floating exchange rate regime towards a reliance on administrative controls, including rules on surrendering foreign exchange.

In 2022, Myanmar’s central bank ordered ministries and local governments not to use foreign currencies for domestic transactions, to help relieve pressure on the kyat.

A spokesman for the junta did not immediately respond to a request for comment.

The military authorities have said they are trying their best to revive the economy and blame foreign-backed “sabotage” for the crisis. REUTERS

Join ST's Telegram channel and get the latest breaking news delivered to you.