Myanmar’s economy to shrink by 18% due to military coup and Covid-19

The civil unrest following the February military coup, paired with the a spike in Covid-19 infections, is expected to cause Myanmar’s economy to contract by 18% this year, according to the World Bank.

Since the military takeover, ousting the country’s elected leader Aung San Suu Kyi of the National League for Democracy, it’s estimated that more than 900 people have been killed by security forces, according to a local monitoring group. Some were shot and killed while protesting. Some were children at home when troops open fire in their neighbourhoods.

The military have tried to justify the coup, claiming the takeover was needed due to election fraud. Aung San had won in a landslide. Prominent ethnic armies and rebel fighters have openly opposed the coup, leading to violent clashes, some near the Thai border.

The political unrest lead many banks to shut down and authorities were not able to issue bills or collect taxes, freezing the country’s economy. Shutdowns, strikes and internet blackouts following the coup have also impacted the economy.

The economy has already been battered by the coronavirus this year. World Bank says that now Myanmar’s economy is expected to shrink by 18% in the fiscal year, which ends in September. The contraction would make the economy “around 30% smaller than it would have been in the absence of Covid-19 and the military takeover,” World Bank says. The lender says the Myanmar kyat has depreciated by around 23% against the US dollar.

The poverty rate is expected to double by the beginning of 2022 when compared to the 2019 rate before Covid-19.

Myanmar attracted foreign investors after 2011 during a period of democratic reforms and economic liberalisation. But since the coup and bloodily crackdown, many foreign investors have either suspended operations or pulled out completely, including the Norwegian telecoms giant Telenor. The company said it is selling its Myanmar subsidiary, a leading operator in the country, with 18 million mobile phone customers.

SOURCE: Reuters