Fruit and vegetable vendors at a market in Kalau, Myanmar.
According to a well-known risk assessment agency, Myanmar faces a second consecutive year of economic recession as the global financial turmoil combines with the political and economic turmoil caused by the February 2021 coup d’état.
In its latest outlook for Myanmar, released yesterday, Fitch Solutions, a division of the Fitch Group, predicts the country’s economy will contract by 5.5% in the current fiscal year ending in September.
The negative growth outlook reflects the impact of the ongoing post-coup conflict exacerbated by the impact of “high global commodity prices and domestic inflation,” Fitch said in a report.
While this represents an improvement from the unlikely 17.9% decline that Myanmar experienced in FY 2020-21, Fitch does not predict an immediate end to the country’s economic difficulties.
“Our projections imply that economic conditions in Myanmar will remain extremely challenging in the coming months,” the report said. “We do not expect the economic growth lost during the pandemic to be recovered until at least FY28.”
The forecast speaks to the degree of turmoil caused by the military takeover in February 2021. In the nearly 18 months since then, security forces have killed about 2100 people, according to the Association for Assistance to Political Prisoners, which keeps a count of those killed and detained since the coup. The UN Refugee Agency reported this week that the number of displaced people in Myanmar already exceeded 1.1 million.of which approximately 769,400 people were displaced after the coup.
The conflict also shows no signs of ending, as the military junta now faces a determined coalition of opponents, including the Government of National Unity (NUG), a kind of internal government in exile made up of members of the ousted civilian government and their allies. , People’s Defense Forces with little ties to the GUG, and ethnic armed groups fighting for decades for autonomy.
The flip side of this political turmoil is near-economic collapse. As Western countries imposed economic sanctions and international investors withdrawn from the countryMyanmar experienced a sharp spike in unemployment and collapse in value kyat currency. In the meantime, the conflict has destroyed vital infrastructure and hampered daily economic activity in many regions of the country, including parts of central Myanmar that were previously largely conflict-free. The World Bank, which is due to publish its own forecast for Myanmar tomorrow, rated last year’s economic downturn of 18 percent.
Fitch forecasts that the unresolved political crisis will continue to weigh heavily on the country’s economic outlook, and vice versa. “Economic difficulties will increase the scale of social discontent and encourage more people to take up arms against the junta,” the statement said. “This is likely to cause even more damage to infrastructure and hurt business operations, partially dampening any potential positive growth momentum from the easing of COVID-19 restrictions in 2022.”
The group said it forecasts real GDP growth to return to positive growth of 2.5 percent in fiscal 2023 as global commodity prices and inflation begin to ease, “relieving some of the pressure on household real disposable income.” But given the low statistical base, this projected recovery has been called “minor”.
“The growth rate that we forecast for 2023 will be completely insufficient to lead to a significant improvement in living conditions and the situation of poverty in a country where about half of the population lives in absolute poverty,” the report says.