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Decades of isolationist military rule have left Myanmar poor, economically underperforming, and riven by the suppression of ethnic groups. In 2008, a new Constitution paved the way for managed political and economic reform and from 2011, gradual liberalization began under a transitional military government, setting in motion a “triple transition”: from military to civilian rule, from a planned to a more market-based economy, and from widespread internal conflict to durable peace.

The first democratic elections in 2015 marked a turning point for Myanmar, generating a wave of optimism. Unification of exchange rates, liberalization of product and factor markets, integration into regional markets, and modernization of economic and financial institutions and systems resulted in rapid economic growth (above 7 percent per year) and measurable improvements in social welfare. Poverty almost halved, falling from 48 percent to 25 percent between 2005 and 2017.

On February 1, 2021, the military again took power by declaring a state of emergency. The combined effects of the military takeover, COVID-19, internal conflict and global disruptions have deepened Myanmar’s economic and humanitarian crisis. Since March 2020 poverty is estimated to have doubled, with about 40 percent of the population living below the national poverty line in 2022: nearly a decade of progress on poverty reduction has been undone. The military extended the state emergency for another six months starting from February 1, 2023, and there has been an increase in fighting in the central and southeast regions. The number of internally displaced persons is expected to reach 2.7 million by the end of 2023.

The World Bank’s January 2023 Myanmar Economic Monitor forecasts 3 percent growth in the year ending September 2023. This means that per capita GDP will be around 13 percent lower than in 2019, indicative of the persistent impacts of recent shocks on both supply and demand. In the absence of further shocks, the economy is likely to continue to expand slowly beyond 2023, though at rates well below those observed before the pandemic.

The failure to return to pre-pandemic levels of activity contrasts with the situation in most of the East Asia and Pacific region. Myanmar’s economy remains subject to significant volatility and uncertainty, with business operations disrupted by conflict, electricity outages, trade and foreign exchange restrictions, shortages of inputs, plus frequently changing rules and regulations.

The depreciating kyat, combined with increases in global prices and ongoing logistics constraints has fueled inflation, which reached almost 20 percent in mid-2022. Household incomes continue to be stretched by the cumulative impact of recent shocks. In July and August 2022, almost half of all households reported income losses compared to the previous year, reducing food and non-food consumption in response.

While moderate growth is expected in services and agriculture over the next year, domestic consumption and industrial sector growth are expected to slow as exports and domestic demand weaken. Although downside risks remain elevated, with increased conflict possible ahead of planned elections, a stronger than expected recovery in China, following the roll-back of pandemic-related restrictions, may provide an added boost to bilateral trade and investment flows.

In the medium and longer terms, Myanmar’s potential for inclusive growth has been sharply curtailed. Funding to critical health and education services is being curtailed and a lack of trust in public services is reducing their use. Lost months of education, rapid increases in unemployment and displacement, and growing out-migration are all likely to reduce already low levels of human capital over the longer term.


Last Updated: Apr 10, 2023


Myanmar: Commitments by Fiscal Year (in millions of dollars)*

*Amounts include IBRD and IDA commitments
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