YANGON/GENEVA (Bloomberg): The World Bank expects Myanmar’s economy to contract in the current fiscal year, as elevated inflation, a slumping currency, and electricity and labor shortages further pressure a war-torn nation.
Myanmar’s gross domestic product in the fiscal year ending March 2025 is expected to shrink by 1% from a previous 1% growth forecast, with the aftermath of Typhoon Yagi in September exacerbating the situation, according to a World Bank report published Wednesday. The military junta put its growth estimate of 3.8%.
The World Bank said its latest forecast implies that the country’s economic output in 2025 would have shrunk by about 11% since 2019. The declines are due to shocks from a military coup in 2021 that renewed a civil war across the Southeast Asian country.
"A further escalation in conflict, including in the run up to possible elections in 2025, or another severe natural disaster could depress output across a range of sectors,” the World Bank said. If that happens, longer and broader disruptions may follow and plunge households deeper into poverty, it added.
It sees inflation staying high at an annual average of 26% with price pressures persisting next year from the weak kyat currency, import controls and other disruptions, it said. The growth forecast for the following year remains subdued, assuming that the conflict doesn’t escalate, the World Bank said.
Persistent shortages of imported raw materials and electricity are hurting manufacturing, agriculture and services, the report said. Also more than half of Myanmar’s 330 townships are experiencing active conflict, disrupting supply chains and border trade, it added.
The bleak outlook is partly due to rising international migration from Myanmar in recent years, triggering domestic shortages of labor and human capital.
The United Nations estimates that 1.5 million more people since October 2023 have been displaced, taking the total to some 3.5 million or about 6% of the population. -- ©2024 Bloomberg L.P.
