Myanmar’s economy is slowly improving, but it is a fragile recovery. Economic growth is no longer stagnant, but is also “unequal”, with the most of the burden placed on the poorest, according to Mariam Sherman, Country Director of Myanmar, Cambodia and Laos at the World Bank.
Despite the prediction of a 3% increase in GDP, the report highlighted myriad issues hindering progress, which could affect their predictions.
Ever increasing costs for food and other commodities mean that, since the previous report in 2022 regarding food security, things have only got worse, affecting over 5 million households as the unemployment rate climbs.
The recent sanctioning by The United States of Myanmar’s two state-owned banks, the Myanmar Foreign Trade Bank and the Myanmar Investment and Commercial Bank, has also had the effect of sharply raising the value of the greenback against the Kyat, to a rate of 3,300-3,500 MMK to the USD in the private market as of June 29th.
The report also mentions that, despite some stabilisation, with average inflation expected to ease to 14% in a year’s time, supply shortages and policies, which increase reliance on central bank financing of budget deficits, are likely to keep inflation higher.
It also mentions the ongoing armed conflict, the inability to provide a regular supply of electricity and all around deterioration of the economic environment. All this is compounded by policy changes that “continue to create uncertainty and obstacles for doing business, with further regulations and restrictions introduced on international trade and financial transfers.”
Since the coup in 2021, Myanmar’s Kyat had tanked by over 60% in value as, prior to the coup, the Kyat to Dollar rate remained stable, at around Ks 1,350 per dollar.
Amidst further worries, more businesses continue to leave Myanmar.
Inditex, a textile group made up of Zara, Massimo Dutti and more, have announced that they are been preparing to leave Myanmar on June 22nd.
While no specific date is mentioned in the report by the Sourcing Journal, the spokesperson for Inditex says the group has been steadily reducing production in Myanmar.
Pact Global Microfinance Fund (PGMF) – Myanmar, a microfinancing service with the backing of the United Nations Development Program, had also announced plans to leave Myanmar.
Since 1997, the PGMF has been helping Myanmar’s many remote and rural areas and is especially relied upon by farmers and other small to medium enterprises.
