The hanging of four activists in Myanmar has created global news but under the political lid, economic difficulties are brewing more loudly. As conflict continues, much less than before but still on, farmers, business people and consumers suffer continuously. Global media focuses on insurgencies and protests but Myanmar economics remains in very worrying shape. The Sri Lankan crisis has finally pushed many to look at this sector more closely as Asia suffers from the global backlash
“Conditions have improved since last year, right after the military ousted the elected government of Aung San Suu Kyi, but the country “remains a long way short of a recovery,” said Kim Alan Edwards, a senior World Bank economist.
Myanmar along with Sri Lanka and Laos are hit by soaring prices and weak currencies. The army coup as the pandemic came has stalled with 40% living in poverty. As expected, those already poor have fallen in worse times.
Depleting foreign exchange reserve
A 3% growth is possible this year's annual pace in the fiscal year that ends in September. Last year the economy contracted by 18%. It might take another 6 years to reach pre takeover levels according to some experts.
Foreign investment has largely collapsed and companies including energy outfits like France’s Total SA and Telenor of Norway have left. While factories are doing better workers are getting fewer hours and lower wages.
The exact state of Myanmar’s foreign exchange reserves is unclear since the last official data were from late 2020, when they were estimated at about $6 billion-$7 billion. About $1 billion are known to have been frozen by U.S. sanctions.
The World Bank thinks that tourism, low export earnings and costs for imports of oil and gas and materials needed for manufacturing may have dented that reserve a lot. However, it’s not at the level as Sri Lanka is.
In an effort to save hard currency, Myanmar’s central bank has ordered that dollars have to be deposited to banks and converted to the local currency, kyats, at lower rates than the unofficial one.
The rural areas where Myanmar’s poorest live, are suffering the most including anti-regime insurgencies that are going on. It’s disrupting farming and supply of produce to markets significantly. But a 70% jump in the price of fuel and higher costs for fertilizer and transport also are taking a severe toll.
The real bad news is that the bad news is not over and the worst is yet to come. The risk assessment group Fitch Solutions predicts that the country’s lost economic output won’t be recouped until 2028. In fact, due to weak data availability, no clear picture is available and donors and agencies don’t agree on the actual situation. All this adds up to more bad news.
Hanging political opponents is understandable from their point but the dragon at the gate is not anti-military activists but the global economy which is laying its fangs deep into Myanmar