BANGKOK (AP) — Myanmar’s economy grew 3% last year and will likely hit the same pace in 2023, but it is still far behind where it was before the army took power in early 2021, the Bank said. World in a report. released on Monday.
The global development agency estimates that Myanmar’s level of economic activity is still more than 10% below where it was before the pandemic and the military takeover. On a per capita basis, it’s even further behind, she says.
If the global economy slows further as expected, exports and investment may weaken after recovering somewhat from the pandemic and disruptions caused by civil strife and foreign sanctions after the army toppled Aung’s elected government. San Suu Kyi.
The return to military control after nearly a decade of quasi-civilian rule sparked mass protests that turned into armed revolts, as well as a decades-long conflict between the government and armed ethnic groups.
“Economic activity has continued to be disrupted by the ongoing conflict, which has had devastating effects on lives and livelihoods, and by electricity shortages,” the report says.
Myanmar’s economy contracted by around 18% in 2021, after growing at a rate of 6% or more in previous years. The slow pace of expansion last year, from a very low base, suggests that conditions remain weak.
“The surprising thing is that growth has not been higher,” Kim Alan Edwards, a senior economist at the World Bank, said in an online briefing. “Growth is nowhere near the levels we saw in 2019.”
Like other emerging economies, Myanmar has had to deal with a weakening currency against the dollar. The value of the kyat fell by around a quarter between June and December last year and is less than half the value it was two years earlier. That makes imports of vital commodities like oil much more expensive in local terms.
Combined with higher prices for many commodities, including oil and gas, Myanmar has seen inflation of almost 20% since July, according to the report.
“While the kyat has stabilized in recent months, currency shortages persist, which, coupled with onerous trade restrictions, has affected the ability of companies to supply a variety of imported goods,” it said.
World Bank economists said controls imposed by the central bank to support the kyat and protect foreign reserves have been relaxed, making it easier for exporters to get credit or hold onto their earnings. But many companies and individuals are forced to comply with orders to convert foreign currency into kyat at the official exchange rate of 2,100 kyat to the dollar, when the market value is about 2,800 kyat.
The report says that agriculture and garment manufacturing have recovered and some companies are finding ways to operate through informal payments and trade channels. The reopening of Myanmar’s trade routes with China has also helped.
But the risks have been increased by security problems, due to the civil conflict, which add to the costs and delays in the transport of goods.
“There are no easy solutions to the Myanmar situation,” Edwards said, pointing to a lack of transparency that obscures what is happening. “Rules and regulations can change at any time and can favor some and not others.”
