Volunteers ride a boat through a flooded area, searching for stranded people following the impact of Typhoon Yagi in Taungnoo city, Myanmar, September 17, 2024. - Photo: Reuters file
YANGON: Myanmar's economy is expected to shrink by 1% in the current fiscal year, the World Bank said on Wednesday (Dec 11), sharply downgrading its economic forecast as severe floods compounded the challenges facing the conflict-torn country.
In June, the bank had projected Myanmar's economy would grow 1% during the current fiscal year, which ends in March 2025, but warned of increasing poverty and escalating violence.
The country of 55 million people has been in turmoil since 2021 when the military seized power from the elected civilian government triggering a nationwide protest movement that evolved into an armed rebellion against the junta.
The coup abruptly ended a decade of tentative democratic and economic reform in Myanmar, with Western investors pulling out of the country and sanctions disrupting trade.
"The level and intensity of armed conflict remains high, severely affecting lives and livelihoods, disrupting production and supply chains, and heightening uncertainty around the economic outlook," the World Bank said in its report released on Wednesday.
The bank said multiple sectors of the economy were struggling, and that agricultural production was likely to drop as a result of Typhoon Yagi, which struck in September and caused widespread flooding.
"The manufacturing and services sectors are projected to contract slightly, given persistent shortages of raw materials, imported inputs and electricity, weak domestic demand, and the ongoing impacts of conflict and economic uncertainty," it said.
A junta spokesman did not respond to a call from Reuters seeking comment.
About 25% of Myanmar's population is experiencing acute food insecurity due to inflation and supply shortages exacerbated by the war, the World Bank said.
It said inflation was expected to remain at 26% in annual average terms this fiscal year, slightly lower than 27.5% in 2023-24.
The expanding civil war, where a coalition of new armed groups and established ethnic armies have beaten back the well-armed junta, has now engulfed more than half of Myanmar's 330 townships and forced 3.5 million people from their homes, according to the report.
"Even assuming no further escalation in conflict, growth is expected to remain subdued the following year," the World Bank said. - Reuters
