Myanmar’s economy expected to contract 18% in 2021: World Bank
Bangkok, July 26 (EFE).- The economy of Myanmar might contract by 18 percent during the current financial year, the World Bank said Monday.
The country is mired in deep political and social crisis following the military coup on Feb.1 and is facing its worst wave of the Covid-19 pandemic.
In March, the World Bank had projected that the economy would contract by 10 percent.
The estimated contraction will have “damaging implications for lives, livelihoods, poverty and future growth,” the World Bank Myanmar Economic Monitor showed.
The percentage of the population living below the poverty line is likely to more than double by the beginning of 2022, compared to 2019 levels, the bank said.
The bank estimates the loss of around one million jobs – the equivalent of between 4 and 5 percent of total employment in 2019.
It also estimated a decline in incomes of many workers in the country due to reduced hours or wages.
Adding to the economic woes this year are the adverse effects caused by the pandemic in 2020.
The World Bank estimates that an 18 percent contraction would mean that “the economy is around 30 percent smaller than it would have been in the absence of Covid-19 and the military takeover of February 2021.”
Myanmar, which began a democratic transition in 2011 after decades of military rule, had experienced rapid growth before the onset of the pandemic and the subsequent military coup.
Almost six months after the coup led by General Min Aung Hlaing, the military has still not managed to control the entire country.
The country is mired in chaos with massive strikes in sectors, bringing the economy to a standstill.
Since January, the value of the Myanmar kyat against the US dollar has dropped 23 percent, which, combined with trade disruptions, has led to a rapid increase in prices of some imported goods, including fuel, the World Bank said.
“While there were initial signs of stabilization in some areas in May and June, with mobility improving and logistics disruptions easing, overall economic activity remained very weak,” said Kim Alan Edwards, World Bank Senior Economist for Myanmar.
A further contraction is likely from July onwards due to the recent surge in Covid-19 cases.
Deep mistrust of the military has aggravated the new wave of the pandemic linked to the highly contagious Delta variant.
The military rulers have brutally cracked down on dissidents and arrested and persecuted thousands of healthcare workers who are on indefinite strike and refuse to work under the orders of the military regime.
“Over the longer term, recent events have the potential to jeopardize much of the development progress that has been made over the past decade,” the World Bank said.
“Significant impacts on investment, human capital accumulation, and the environment for doing business are likely to impair prospects for economic growth over the longer term,” it added.
In April, the Fitch Solutions consulting firm said that it expects the gross domestic product to contract by up to 20 percent.