Thailand
World Bank Says Myanmar Economy Remains Fragile as Prices Soar
(Bloomberg) — The outlook for Myanmar’s economy remains weak as surging inflation, dollar shortages and lingering domestic conflict pose challenges to its pandemic recovery, according to the World Bank.
The lender estimates that gross domestic product in 2022 will be about 13% lower than in 2019 despite a better-than-previously expected 3% GDP growth seen for the fiscal year ending September, it said in its latest Myanmar Economic Monitor released Thursday morning in Asia. The economy contracted 18% last fiscal year in the bank’s estimate.
“The balance of payments situation is a growing concern, with US dollar shortages already limiting the availability of several imported products, including fuel,” the lender said in a press release accompanying the report, flagging that prices are likely to remain high. “Elevated levels of conflict in many areas of the country are expected to continue to constrain productive activity. As a result, a return to pre-pandemic levels of economic activity is unlikely in the near term.”
Myanmar is lagging the recovery in the region where GDP in large countries is seen to have rebounded above 2019 levels or projected to do so in 2023, the World Bank said. A coup in 2021 still weighs on the economy, while recent policy shifts add to risks.
“Burdensome” trade license requirements, abandoning the managed float exchange rate regime and ordering the surrender of foreign currencies have inhibited exports and caused shortages, jacking up costs partly due to the war in Ukraine, the lender said.
“Trade and foreign exchange restrictions have unwound previous reforms to liberalize trade and unify the exchange rate,” the World Bank said. “These policy changes have also allowed the authorities greater control over the allocation of resources in the economy, which is likely to benefit some, but ultimately divert resources from their most efficient use.”
The latest available data indicate that inflation accelerated to 17.3% year-on-year in March, it said. Still, a recovery in some sectors including manufacturing and construction are driving the modest growth expected this year.