Economic Shrinkage Predicted

The World Bank has revised its economic forecast for Myanmar, projecting a 1% shrinkage in the current fiscal year. This downgrade comes as severe floods exacerbate the challenges faced by the conflict-torn country.

Initially, the bank had anticipated a 1% growth for Myanmar's economy during the fiscal year ending March 2025, but the increasing poverty and escalating violence have led to this significant adjustment.

Impact of Military Coup

Since the military's seizure of power in 2021, Myanmar has been in turmoil. This coup abruptly ended a decade of tentative democratic and economic reform, leading to Western investors pulling out and sanctions disrupting trade.

The World Bank's report highlights the high level and intensity of armed conflict, which severely affects lives and livelihoods, disrupts production and supply chains, and heightens uncertainty around the economic outlook.

Sectoral Struggles and Food Insecurity

Multiple sectors of Myanmar's economy are struggling, with agricultural production likely to drop due to Typhoon Yagi's widespread flooding. The manufacturing and services sectors are also projected to contract slightly due to persistent shortages of raw materials, imported inputs, and electricity, weak domestic demand, and the ongoing impacts of conflict and economic uncertainty.

About 25% of Myanmar's population is experiencing acute food insecurity due to inflation and supply shortages exacerbated by the war. Inflation is expected to remain at 26% in annual average terms this fiscal year.

Civil War's Broader Impact

The expanding civil war, involving a coalition of new armed groups and established ethnic armies, has engulfed more than half of Myanmar's 330 townships and forced 3.5 million people from their homes. The World Bank anticipates subdued growth even if the conflict does not escalate further.