(Reuters) – Myanmar’s economy will remain critically weak for much of 2022 and will be “severely tested” by the impacts of a coup a year ago, but there are recent signs of stabilisation in manufacturing and exports, according to the World Bank.
In its latest update on Myanmar’s economy, the World Bank projects growth of 1% in the year to September 2022, weighed down by the impacts of the pandemic and the military’s overthrow of an elected administration on Feb 1, 2021.
Myanmar’s economy has tanked since the coup and the junta’s crackdown on its opponents and ensuing backlash from armed groups has led to a retreat by foreign firms concerned about political risks, sanctions and damage to their reputation.
The World Bank said there were substantial supply and demand issues, cashflow shortages for businesses and reduced credit access, while half of firms it surveyed reported difficulties last year due to a sharp depreciation of the kyat currency.
“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 World Bank said in its January economic monitor.
Myanmar’s junta has blamed last year’s economic crisis on foreign-backed “sabotage”.
The military government on Thursday said it had approved $3.8 billion in foreign investment since the coup, owing to what it called a return to stability and confidence in its economic potential.
The World Bank said events since the coup were likely to limit Myanmar’s growth potential, with most indicators suggesting private investment had fallen markedly, while the cost of imports has risen and kyat-denominated revenues are worth less in foreign currency terms.
(Writing by Martin Petty; Editing by John Geddie)