Although Myanmar’s economy made some progress in the first half of this year, the latest assessment by the World Bank paints its bleakest picture of the country yet, suggesting that it increasingly looks like a failed state with an economy that benefits only those who set its increasingly opaque rules and their cronies.
“The shift away from a rules- and market-based system toward one which is opaque and more discretionary has catalyzed a range of rent-seeking activities that distort resource allocation,” the latest Myanmar Economic Monitor, “A Fragile Recovery,” says. “Some businesses have benefitted from privileged access to import licenses, foreign exchange, and state contracts, limiting the ability of other potentially more productive firms to compete,” it notes.
“While some individual businesses and vested interests are benefitting from these shifts, they act to undermine the efficiency of resource allocation and overall productivity across the economy,” it says.
The result, according to the report, is that Myanmar’s economy is “permanently scarred.”
The slight uptick in growth this year has been uneven, the poorest are suffering the most, and—the report suggests—Myanmar stands out regionally as an economic failure.
“Overall, the economy is still operating well below pre-pandemic levels, in sharp contrast to the rest of the region,” the report “A fragile recovery” says.
Mariam Sherman, World Bank country director for Myanmar, Cambodia, and Laos, said: “The poorest are being hit hard by consecutive shocks [and] progress against malnutrition seems to have halted or reversed.”
The report maintains the World Bank’s earlier projection of 3 percent GDP growth for Myanmar this year, but notes this is 10 percent lower than in 2019. It also stresses that even this low-level of growth will be uneven.
“Most economic indicators over the last six months suggest that economic activity is continuing to slowly trend upwards, though from a very low base and with uneven performance across different sectors and firms,” the report says.
It also cautions that its growth projection faces numerous risks: “A worsening of conflict, an additional slump in electricity generation, greater-than-expected persistence of inflationary pressure, or further deterioration in the trade and business environment could result in even lower growth.”
It forecasts that average inflation will fall to 14 percent in the fiscal year ending in September, but adds that “states and regions worse hit by conflict and transport disruptions will be more susceptible to bouts of inflation.”
Both the deficit and public debt are rising, the value of the kyat is falling, employment and wages are declining, and food insecurity (also known as hunger) is surging, the report says.
“At the end 2022, almost half of Myanmar households reported decreasing incomes over the past year, while only 15% reported an increase,” the report says.
A survey of farming households in May found that 48% of them worry about not having enough food to eat, up from about 26% in May 2022. A recent assessment by UN agencies estimates that 29% of households are moderately or severely food insecure, while a World Bank farm survey also found a “remarkable drop in the consumption of nutritious foods such as milk, meat, fish, and eggs.”
