- Following the expected economic decline of 18 percent in the year ended September 2021
- The short-term outlook will depend on the dynamics of the epidemic and the effects of the conflict
- Over time, events from February 2021 are expected to limit Myanmar’s growth potential.
- Many indicators suggest that private investment has declined significantly,
- The results of a recent World Bank company survey show
Following the expected economic decline of 18 percent in the year ended September 2021, World Bank’s Myanmar Economic Monitor, released on January 26, is a one percent growth project for the year to September 2022.
While it shows the latest signs of recovery in some areas, speculation is still accompanied by a much weaker economy, about 30 percent smaller than it would have been in the absence of COVID-19 and the February 2021 coup.
The short-term outlook will depend on the dynamics of the epidemic and the effects of the conflict, as well as the extent to which trade and finance issues continue, as well as disruptions to other critical services including electricity, utilities, and digital communications.
Over time, events from February 2021 are expected to limit Myanmar’s growth potential.
“Many indicators suggest that private investment has declined significantly, and previously operational projects are no longer viable as demand remains weak, import costs have skyrocketed, and kyat revenues are low in terms of foreign exchange reserves,” said Myanmar World Bank Senior Economist. Kim Edwards.
Among the latest signs of economic recovery, human migration has returned to 2020 levels after falling nearly 70 percent below the pre-COVID-19 baseline levels in July 2021, although almost 30 percent below pre-epidemic levels of retail, leisure and travel. This is likely to support the service sector, although overall consumer demand continues to weaken due to recent wage shocks and hiring. In the manufacturing sector, production and employment also appear to be stable, and exports have stabilized in recent months.
Nevertheless, economic activity continues to be affected by serious weaknesses in both service delivery and demand. Factories continue to report sharp reductions in sales and profits, shortages, and a lack of adequate access to banking and online services.
The results of a recent World Bank company survey show that almost half of all companies experienced disruption to the supply of goods and services in October, largely due to rising costs between constraints and a sharp decline in the price of kyat. Farmers continue to be affected by the high prices of important inputs, restrictions on access to credit, and ongoing transportation constraints.
Ongoing economic pressures have a profound effect on food security and food security, especially for the poor, whose savings have been cut short by recent shocks. The share of Myanmar people living in poverty is expected to double compared to pre-COVID-19 levels. Combined with agricultural production pressures, inflation and declining access to credit it is expected to further increase food security risks.