By Shawn Naing
(Reuters) – Myanmar's economy is expected to contract by 1% in the current fiscal year, the World Bank said on Wednesday, sharply lowering its economic forecast as massive floods exacerbate the challenges facing the conflict-torn country.
In June, the bank expected Myanmar's economy to grow by 1% during the current fiscal year, which ends in March 2025, but warned of increasing poverty and escalating violence.
The country of 55 million people has been experiencing unrest since 2021 when the military seized power from the elected civilian government, sparking a nationwide protest movement that evolved into an armed rebellion against the junta.
The coup abruptly ended a decade of temporary democratic and economic reform in Myanmar, with Western investors withdrawing from the country and sanctions disrupting trade.
“The level and intensity of armed conflict remains high, severely impacting lives and livelihoods, disrupting production and supply chains, and increasing uncertainty about the economic outlook,” the World Bank said in its report issued on Wednesday.
The bank said multiple sectors of the economy are suffering, and agricultural production is likely to decline as a result of Typhoon Yagi, which hit the country in September and caused widespread flooding.
“The manufacturing and services sectors are expected to contract slightly, given the ongoing shortages of raw materials, imported inputs and electricity, weak domestic demand, and the continuing effects of conflict and economic uncertainty,” the report said.
A spokesman for the military council did not respond to a call from Reuters requesting comment.
The World Bank said that about 25% of Myanmar's population suffers from acute food insecurity due to inflation and supply shortages exacerbated by the war.
Inflation is expected to remain at 26% on average this fiscal year, slightly lower than 27.5% in 2023-24, he said.
According to the report, the widening civil war, in which a coalition of new armed groups and existing ethnic armies defeated a well-armed junta, has now engulfed more than half of Myanmar's 330 towns and forced 3.5 million people from their homes.
“Even assuming the conflict does not escalate, growth is expected to remain weak in the following year,” the World Bank said.
