BANGKOK (AP) – Myanmar’s economy grew by 3% last year and is likely to catch up in 2023, but it is still far behind where it was before the army seized power. power in early 2021, the World Bank said in a report released. on Monday.
The Global Development Agency estimates that Myanmar’s level of economic activity is still more than 10% below pre-pandemic levels and military procurement. It’s even further behind on a per capita basis, they say.
If the global economy continues to slow as expected, exports and investment could weaken after recovering somewhat from the pandemic and the disruption caused by civil wars and foreign sanctions after the army overthrew the elected government of Aung San Suu Kyi.
The return to military control after nearly a decade of quasi-civilian rule provoked mass protests that escalated into armed insurgencies, adding to decades of conflict between the government and armed ethnic groups.
“Economic activity continues to be hampered by ongoing conflicts, which are devastating to lives and livelihoods, and by energy shortages,” the report said.
Myanmar’s economy shrank by about 18% in 2021 after growing at a pace of 6% or more in previous years. The slow pace of expansion over the past year from a very low base suggests that conditions remain weak.
“What is surprising is that growth has not been higher,” Kim Alan Edwards, senior economist at the World Bank, said in an online update. “Growth is nowhere near as high as in 2019.”
Like other emerging economies, Myanmar has had to contend with a weakening of its currency against the dollar. The value of the kyat fell by about a quarter from June to December last year and is less than half the value it was two years earlier. This makes the import of essential commodities such as oil much more expensive locally.
Along with higher prices for many commodities, including oil and gas, Myanmar’s inflation hit nearly 20% in July, the report said.
“While the kyat has stabilized in recent months, exchange restrictions persist which, along with onerous trade restrictions, have impacted the ability of companies to supply a range of imported products,” she said.
World Bank economists said the controls imposed by the central bank to support the kyat and protect foreign exchange reserves would be eased, making it easier for exporters to obtain credit or maintain the their profits. But many businesses and people are being forced to comply with orders to exchange foreign currency for kyats at the official rate of 2,100 kyats per dollar when the market value is around 2,800 kyats.
According to the report, agriculture and clothing 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 contributed to this.
However, the risks were increased by security issues arising from the Civil War, which added to the cost and delay of moving goods.
“There are no easy solutions to the Myanmar situation,” Edwards said, pointing to the lack of transparency that obscures what is happening. “Rules and regulations can change at any time, favoring some and not others.”
Elaine Kurtenbach, The Associated Press
