Myanmar's economy will be severely tested by the ongoing impacts of the military coup and the surge in COVID-19 cases in 2021, the World Bank said in its latest report.
The World Bank's Myanmar Economic Monitor, released earlier this week, projects growth of 1 per cent in the year to September 2022. This comes following an expected 18 per cent contraction of the economy in the year September 2021.
While reflecting recent signs of stabilization in some areas, the projection remains consistent with a critically weak economy, around 30 per cent smaller than it might have been in the absence of COVID-19 and the February 2021 coup.
The World Bank said in a press statement that the near-term outlook will depend on the evolution of the pandemic and the effects of conflict, together with the degree to which foreign exchange and financial sector constraints persist, as well as disruptions to other key services including electricity, logistics and digital connectivity.
"The situation and outlook for most people in Myanmar continues to be extremely worrying," said World Bank Country Director for Myanmar, Cambodia and Lao PDR Mariam Sherman. "Recent trends of escalating conflict are concerning - firstly from a humanitarian perspective but also from the implications for economic activity. Moreover, with a low vaccination rate and inadequate health services, Myanmar is highly vulnerable to the Omicron variant of COVID-19."
The Washington-based financial institute said economic activity continues to be affected by substantial weaknesses in both supply and demand. Firms continue to report sharp reductions in sales and profits, cashflow shortages, and a lack of adequate access to banking and internet services.
Results from the latest World Bank firms' survey indicate that around half of all companies experienced disruptions in the supply of inputs and raw materials in October, largely because of increases in costs amid logistics constraints and a sharp depreciation of the kyat.
According to the statement, ongoing economic pressures are having a substantial effect on vulnerability and food security, particularly for the poor, whose savings have been drained as a result of recent shocks.
Over the longer term, events since February 2021 are expected to limit Myanmar's growth potential, the World Bank said.
"Most indicators suggest that private investment has fallen markedly, and previously viable projects are becoming unviable as demand remains weak, the cost of imports has risen, and kyat-denominated revenues are worth less in foreign currency terms," said World Bank Senior Economist for Myanmar Kim Edwards.
( With inputs from ANI )
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