Myanmar economy expected to contract by 18% in fiscal 2021: report
YANGON, July 26, 2021 – Ongoing political turmoil in Myanmar and a rapidly rising third wave of COVID-19 cases are severely impacting an economy that had already been weakened by the pandemic in 2020. The economy is expected to contract by around 18% in the past. Myanmar’s fiscal year 2021 (October 2020- September 2021), with damaging implications for lives, livelihoods, poverty and future growth, according to World Bank report Myanmar Economic Monitor, released today.
An 18% contraction, on top of weak growth in fiscal 2020, would mean the country’s economy is about 30% lower than it would have been in the absence of COVID-19 and the February 2021 military takeover. About 1 million jobs could be lost, and many more workers will experience a drop in their earnings due to reduced hours or wages. The share of Myanmar’s population living in poverty is expected to more than double by the start of 2022, compared to 2019 levels.
âThe loss of jobs and income and the increased risks to health and food security exacerbate the well-being challenges facing the poorest and most vulnerable, including those who have already been hit hardest by the pandemic last year â, noted Mariam Sherman, World Bank Country Director for Myanmar, Cambodia and Lao PDR.
Economic activity has been affected by reduced mobility and incomes, protests and labor shortages, as well as the continued disruption of essential business services, including logistics and telecommunications, and public services such as as health and education. Despite the reopening of bank branches and several interventions by the Central Bank of Myanmar, physical currency continues to be scarce and access to banking and payment services remains limited. By mid-July, the Burmese kyat had depreciated by about 23% against the US dollar since late January, which, combined with trade disruptions, led to a rapid rise in the prices of some imported products, including the fuel. Farmers have been affected by falling wholesale prices for some crops, rising input prices and limited access to credit.
Taken together, these shocks weakened consumption, investment and trade, and disrupted business operations and the supply of labor and inputs.
âAlthough there were initial signs of stabilization in some regions in May and June, with improved mobility and lessening of logistical disruptions, overall economic activity has remained very weak and further contraction is likely. from July due to the recent increase in COVID-19 cases, “ noted Kim Alan Edwards, World Bank Senior Economist for Myanmar.
The current third wave of COVID-19 poses an immediate threat to lives, livelihoods and the economy, especially given the lack of capacity of the public health system to respond adequately. Although testing rates remain limited, extremely high positivity rates among those who have been tested indicate widespread community transmission. Combined with the impact of containment measures and precautionary behavior, this will magnify Myanmar’s economic challenges.
In the longer term, recent events may jeopardize much of the development progress made over the past decade. Significant impacts on investment, human capital accumulation and the environment for doing business are likely to jeopardize long-term economic growth prospects.