Myanmar’s economy is forecast to shrink by 18% as it grapples with the coronavirus and the political turmoil unleashed by a coup, the World Bank said Monday. The contracting economy threatens millions with poverty, joblessness and hunger.
A decade ago, the Southeast Asian nation was seen as a promising frontier market. Its military began to slacken its grip, the economy opened up to the outside world for the first time in decades and Aung San Suu Kyi’s National League for Democracy Party was democratically elected.
But observers believe a February 1 coup following a second resounding election victory for Suu Kyi’s party has turned back the clock, wiping out the fragile gains.
“The February coup — together with the most recent third wave of the pandemic, which rapidly worsened in June and July — has had significant economic impacts, much larger than those observed after the earlier surge in COVID-19 cases that began in September last year,” the World Bank’s Myanmar Economic Monitor said Monday.
For that reason, “GDP (Gross Domestic Product) is projected to fall by 18% in FY (Fiscal Year) 2021,” it said, using the Myanmar fiscal year which runs until September as its reference point.
The bank warned the country’s economy will be one-third smaller this year than in 2019 — a stark indicator of the deep gouges made in all areas of economic life.
Since seizing power, the army has killed hundreds of pro-democracy protesters, while foreign investors have fled the country as trade and basic government functions seized up under strikes and widespread civil disobedience.
Now, the coronavirus is running rampant at a time when many medical workers refuse to work for the government, hammering a country with little capacity to vaccinate its people or treat the sick.
The country “might have the highest infection rate in the world,” said Bertil Lintner, an analyst who has written extensively on Myanmar. Lintner told VOA that there was no clear pathway out with a weak healthcare system and “absolutely zero” trust in the government.
Desperate pleas for oxygen and accounts of people dying in homes without any medical support have dominated Myanmar’s social media over recent weeks, as border closures with Thailand and China left shortages of medical equipment and Personal Protective Equipment.
As the virus continues to spread, the economy is shedding jobs.
“Around one million jobs could be lost, equivalent to 4 to 5% of total employment in 2019, and many other workers will experience a decline in their incomes due to reduced hours or wages,” the Bank said.
The coup has also harmed the economy, leaving banks and businesses short of cash, decreasing demand for goods with crackdowns and curfews and even blacking out the internet as the junta scrambles to catch up with the ‘Gen Z’ protesters organizing online.
Norwegian telecoms giant Telenor was forced to write down its $750 million investment in Myanmar to zero because of security concerns for its staff and the increasing communications blackout of the country imposed by the junta.
This month it sold off its operations, marking a major setback for the country. Telenor’s investment in 2014 was seen as a signal of Western confidence in a freshly opening market with a huge demand for consumer goods.
The exit of foreign businesses may signal more trouble for the Myanmar public who are harried by food shortages, price spikes and a currency (kyat) losing its value. The Food and Agriculture Organization of the United Nations warned this month that millions in the country are at risk of going hungry by the end of the year.
The World Bank Monday warned the bigger picture for the country is bleak.
“Recent events have the potential to jeopardize much of the development progress that has been made over the past decade,” the report said.
Many schools and universities remain closed and young people, some of whom are in hiding from the junta, are refusing or unable to work. Analysts warn there will be no easy solutions to the economic troubles.
“The country is going through a very severe economic, social and political crisis — the worst since independence,” Lintner said. “Unless there’s fundamental political change in the country, nothing is going to change,” he said. “Nothing is going to change unless there’s a crack in the military.”