YANGON—The latest report from the World Bank says Myanmar’s economic growth could drop from 6.8 percent to 0.5 percent this fiscal year, as the country has been severely hit by impacts from COVID-19.
The 2019-2020 fiscal year began on Oct.1, 2019 and ends on Sept. 30.
“The global COVID-19 pandemic is dealing a severe blow to Myanmar’s economy,” the report said.
“The slowdown in economic growth threatens to partially reverse Myanmar’s recent progress in poverty reduction while reducing the incomes of households that are already poor,” the bank said.
According to the report, if Myanmar controls the domestic spread of the coronavirus and the global economy swiftly recovers, Myanmar’s GDP growth rate is projected to bounce back to 7.2 percent in the 2020-21 fiscal year. In this scenario, “poverty rates would increase in the short term and will not return to pre-crisis levels until fiscal year 2021-2022.”
“At the moment the medium-term outlook for Myanmar’s economy is positive, but there are significant downside risks due to the unpredictable evolution of the pandemic,” said Mariam Sherman, World Bank Country Director for Myanmar, Cambodia and Lao PDR.
“Under the downside scenario, poverty rates would remain above their pre-crisis level until at least the 2022-2023 Fiscal year,” the bank said in a press release.
Though the agriculture and technology sectors have remained resilient, disruptions in supply chains and weakening global demand have negatively impacted the industrial sector in the country, according to the bank.
“Industrial production is expected to contract by 0.2 percent in current fiscal year as lockdown measures restrict access to labor, the closure of the overland border with China disrupts the supply of industrial inputs, and consumer demand—both domestic and international—remains soft,” the bank said.
The World Bank warned that “precautionary behavior and travel bans continue to negatively impact wholesale and retail trade, tourism-related services and transportation.”
It said that exports will likely remain weak for the rest of the fiscal year “due to the ongoing disruption of supply chains and weakening external demand.” The bank warned that, as a result, tax revenues may decline by 6 percent, year-on-year, in the current fiscal year.
“The report also looked at the Myanmar government’s response to the crisis through the COVID-19 fund and Economic Relief Plan (CERP),” the bank said.
“Robust policy actions are urgently needed. It will be important for the government to boost the effectiveness of the CERP by ensuring flexibility in spending targets, extending support to smaller enterprises and ensuring all poor households can benefit from the plan,” Sherman said.
The CERP seeks to ease the impact of the pandemic by implementing new measures and response plans, ranging from monetary reforms and increased government spending to measures to strengthen the health care system in the country.
In April, the World Bank warned that Myanmar’s GDP growth was projected to slow to 2-3 percent in the current fiscal year due to COVID-19, and that the economic impact will hit poor and vulnerable households across the country badly.
Myanmar’s economy has faced a significant slowdown since late January, with small and medium-sized enterprises in the tourism, garment, border trade and export sectors being hit the hardest, causing massive losses for producers, exporters and workers.
Last week, State Counselor Daw Aung San Suu Kyi said that government expects the most severe economic impacts of COVID-19 will be felt in the final four months of this year.
However, she reassured people in Myanmar that the government is well prepared to address the impacts.
