YANGON, December 16, 2020 – Myanmar’s economy continues to suffer from the COVID-19 pandemic, with growth estimated to have slowed sharply to 1.7 percent in FY19/20, down from 6.8 percent the previous year. The pandemic and associated containment measures have weakened consumption and investment, and disrupted businesses’ operations and the supply of labor and inputs, according to the World Bank’s Myanmar Economic Monitor, released today.
As a result of COVID-19, the poverty rate could increase from 22.4 percent in FY2018/19 to 27 percent in FY20/21 and return to pre-crisis level in FY21/22 at the earliest. The first wave already forced many poor households to adopt risky and unsustainable mechanisms to buffer the shock, including reducing their daily food consumption. Even before the second wave hit in late-August, many households were struggling to repay their debts. The ongoing restrictions under the second wave put more households at risk of entering poverty.
Stay-at-home measures during the second outbreak have more negative effects on businesses than the first. Close to half of all surveyed firms in Yangon were temporarily closed in October and 35 percent were concerned they would not be open in three months. Impacts on manufacturing and the services sector have been particularly severe, though some businesses have been able to better weather the impact of mobility restrictions by taking advantage of e-commerce opportunities.
Due to the ongoing impacts of the pandemic, economic growth is projected to remain subdued at 2 percent in FY20/21. But provided mobility restrictions are gradually relaxed and cases of local transmission of the virus slow, the economy is projected to slowly recover from March 2021 onwards. The medium-term outlook is positive – supported by public investment, a resurgence in manufacturing, and productivity gains associated with the adoption of digital technology – with growth estimated to recover to 7 percent on average.
However, risks remain high given continued uncertainty about the future evolution of the pandemic, both locally and globally. In the absence of widely distributed vaccines or treatment, new waves of the pandemic could result in prolonged and potentially more severe restrictions, further dampening domestic activity and constraining job growth, savings and access to educational and health services.
“Myanmar needs to act fast in implementing its COVID-19 response plans to support the economy and mitigate increases in poverty,” said Mariam Sherman, World Bank Country Director for Myanmar, Cambodia and Lao PDR. “In the short term, the Government should focus on measures that slow the spread of the virus, provide relief and food security to the poor and most vulnerable, and support economic activity. Over the longer term, public investments in infrastructure and digital technologies can increase domestic demand and employment, while boosting the productive capacity of the economy.”
The Myanmar Economic Monitor is a biannual analysis of economic developments, economic prospects and policy priorities in Myanmar. The publication draws on available data reported by the Government of Myanmar and additional information collected as part of the World Bank Group’s regular economic monitoring and policy dialogue.