People queue to buy subsidised edible oil in Yangon on August 18. Junta policy decisions have caused the price of basic goods to skyrocket. (AFP)
Mizzima
Due to the accumulating adverse effects of the military coup in 2021, Myanmar remains the only economy in East Asia that has not yet returned to pre-pandemic levels of economic activity, according to a report by The Institute for Strategy and Policy – Myanmar (ISP-Myanmar).
The World Bank’s Myanmar Economic Monitor, published on 12 December 2023, reported that “growth is expected to remain subdued over the rest of 2024 and into 2025 given a broad-based slowdown across productive sectors including agriculture, manufacturing, and trade”.
The World Bank report, entitled ‘Challenges Amid Conflict ’projected that Myanmar’s economy would grow just one per cent during the year to March 2024, leaving it the only economy in East Asia that has not returned to pre-pandemic levels of economic activity.
The World Bank warns that the economy will continue to slump over the rest of 2024 and into 2025, given a broad-based slowdown across productive sectors.
The World Bank report also pointed out the rapid rise of consumer prices and depreciation of the country’s currency, while the Economist Intelligence Unit’s (EIU) 13 December analysis reported that because of the de facto devaluation in Myanmar’s exchange rate regime, there will be significant pressure on the official exchange rate and the parallel market rate.
The EIU reported that Myanmar kyat market rate has fallen by more than 60 per cent since the 2021 coup. Moreover, the World Bank reported pressure against production in Myanmar due to “conflict, high logistics costs, trade and foreign exchange restrictions, and electricity disruptions,” which have raised the cost of doing business.
Indicators of business activity have worsened since mid-2023, reported the Myanmar Economic Monitor, as firms reported operating at just 56 per cent of their capacity in September, down 16 percentage points from March.
The World Bank reported, based on the International Food Policy Research Institute’s (IFPRI) survey conducted in mid-2023, that measures of food insecurity have also worsened, with 40 per cent of households reportedly earning less than in the previous year.
The World Bank’s Country Director for Myanmar, Cambodia, and the Lao PDR advised that “the economic situation has deteriorated, and uncertainty about the future is increasing… and high food price inflation has had a particularly severe impact on the poor.”
According to ISP-Myanmar’s socio-economic study conducted to understand the post-coup situation of Myanmar’s society, the rising commodity prices are one of the most prevalent problems people encounter in their daily lives.
Along with these economic hardships, frequent electricity blackouts and losses of job opportunities are increasing the burden on them.
According to ISP-Myanmar’s data, since the armed conflict has intensified and broadened, it is imposing more pressure on logistic flows, and leading to severe impacts on economic activities. For instance, ‘Operation 1027, ’launched by the Three Brotherhoods Alliance (3BHA) on 27 October, has effectively choked border trade with China.
Since the beginning of the operation, almost 91 per cent of China-Myanmar border trade has been clogged, and within more than a month (from 27 October to 15 December), Myanmar lost USD 445.5 million worth of trade.
Myanmar traders are struggling to export their products to China, directing their exports through the Kengtong–Mongla road of Eastern Shan State via the Talone checkpoint; they are encountering higher transaction costs and many of their soft commodities are being damaged.
Though the State Administrative Council (SAC) suggested that the traders move their goods through sea routes, this takes time and is not suitable for agricultural products. The expenses incurred for sea-route trading are almost threefold that of border trade.
Regarding the Thai–Myanmar border trade, the Karen National Liberation Army (KNLA) and People Defense Forces (PDF) have intensified their attacks against junta forces around Kawkareik Township since 30 November and many trucks with goods are blocked on the Asia Highway. Though small vehicles can travel through other roads to avoid the fighting, this allows only for the limited trading of essential commodities.
Simultaneously, the Arakan Army (AA) has attempted to gain control of the important border trade routes.
When the U.S. and some Western countries imposed economic sanctions against the Myanmar Foreign Trade Bank (MFTB) and Myanma Investment and Commercial Bank (MICB), Bangladesh banks followed the order and suspended banking with their Myanmar counterparts in September. Since then, the border trade with Bangladesh has struggled although the overall impact on border trade was limited.
Again, the junta issued an order that exports to Bangladesh must pass through the Sittwe trade point from 4 September 2023 onwards.
On the other hand, in Chin State, Chin resistance forces seized the town of Rihkhawdar in Falam Township, which is a strategic point on the Myanmar–India trade route.
After the military coup in 1988, the former junta was able to bypass international sanctions by expanding and supporting the border trade. However, after the 2021 military coup, international sanctions seem to be more painful for the junta, manifesting with apparent shortages of fuel, essential drugs, and imported foreign goods.
believes that It is conceivable that with the widespread and intensifying conflict, along with the seizure of strategic border trade routes, Myanmar’s people could be forced to live with prolonged shortages of goods, scarcity, and higher commodity prices, according to ISP-Myanmar.
ISP – Myanmar is an independent, non-partisan and non-governmental think tank. Established in 2016, ISP-Myanmar aims to promote democratic leadership and strengthen civic participation in Myanmar through its key strategic programs and initiatives.
