Naypyidaw, 3 February 2022 (TDI): According to the World Bank Myanmar is facing unprecedented challenges amidst rising COVID cases and a recent military coup.
The near-term outlook is not very positive, with many factors compounding to have an adverse effect on the economy.
Myanmar’s economy contracted by 18% in 2021, as predicted by the bank. Growth is projected to be just 1% in 2022. According to estimates, the economy could have been 30% stronger if it wasn’t for the pandemic.
The coup, that occurred in February 2021 is still having long-lasting effects. More than 1,500 people have been killed and another ten thousand or so have been displaced.
“Recent trends of escalating conflict are concerning – firstly from a humanitarian perspective but also from the implications for economic activity. Moreover, with a low vaccination rate and inadequate health services, Myanmar is highly vulnerable to the Omicron variant of COVID-19.” -Mariam Sherman, World Bank Country Director for Myanmar, Cambodia, and Lao.
She also added that the outlook for most people in the country is worrying. Economic activity continues to be affected by weak demand and supply. Firms report a sharp decline in their profits. A lack of access to banking and internet services and disruptions in the supply chain has further put pressure on firms across the country.
The recent shocks have also put the poor at risk as all of their savings have dried up. Poverty is expected to double within the country. World Bank senior economist Kim Edwards said that private investment has fallen greatly, and previously deemed viable projects are not viable anymore.
Kim also added that the costs of exports have risen and the local currency has devalued substantially. Additionally, loss of education and employment will severely affect human capital within the country.
Since Myanmar has been under military rule, several countries have placed sanctions and many foreign businesses are pulling out, recently, Total Energies and Chevron ceased operations in the country. Hundreds of millions of dollars of investment are said to be at risk because of the military coup.