Myanmar's Economic Outlook Deteriorates

By Shoon Naing

Reuters – Myanmar's economy is anticipated to contract by 1% in the current fiscal year, according to the World Bank, which has significantly revised its economic forecast. This decline is attributed to severe floods that have exacerbated existing challenges in the conflict-stricken nation.

Previously, in June, the bank projected a 1% growth for the fiscal year ending in March 2025, but it warned of worsening poverty and rising violence.

The turmoil in Myanmar began in 2021 when the military ousted the elected civilian government, sparking nationwide protests that transformed into an armed resistance against the junta. This coup ended a decade of tentative democratic and economic progress, leading to the withdrawal of Western investors and the imposition of sanctions that disrupted trade.

The World Bank's report indicated that the ongoing high level of armed conflict continues to severely impact lives, disrupt production and supply chains, and create economic uncertainty.

Multiple sectors, particularly agriculture, are struggling. The agricultural sector is expected to decline due to Typhoon Yagi, which caused significant flooding in September. Meanwhile, manufacturing and services are projected to shrink slightly due to shortages in raw materials, imported inputs, and electricity, alongside weak domestic demand and persistent conflict impacts.

Additionally, roughly 25% of Myanmar's population is facing acute food insecurity, worsened by inflation and supply shortages from the ongoing conflict. The World Bank projects inflation to average 26% this fiscal year, a slight decrease from 27.5% in 2023-24.

The civil war continues, now involving new armed groups and established ethnic armies, affecting over half of Myanmar's 330 townships and displacing 3.5 million people. Even with no further escalation, the World Bank predicts subdued growth in the following year.