Myanmar’s financial system is about to shrink by 2 p.c this monetary 12 months, because of the results of intensifying battle and financial mismanagement by the army junta, based on the newest Myanmar financial outlook from the analysis group BMI.
BMI, a unit of Fitch Options, cited the World Financial institution’s current projection that the nation’s financial system will shrink by 1 p.c within the fiscal 12 months ending March 2025, however stated that even such a dire prediction “is perhaps too optimistic.”
As an evidence, it cited the impacts of ongoing battle, pure disasters, fast forex depreciation, excessive inflation, and outward migration, which have mixed to devastate the formal financial system.
“We keep our forecast for the financial system to contract by 2.5% this fiscal 12 months earlier than stagnating in FY2026, leaving the financial system 20.0% smaller than in FY2020,” BMI acknowledged. It later added, “with home battle exhibiting no indicators of easing, the outlook stays bleak.”
In response to the United Nations Workplace for the Coordination of Humanitarian Affairs’ most up-to-date humanitarian update, launched in January, the overall variety of internally displaced individuals (IDP) had reached over 3.5 million on the finish of 2024, equal to round 6 p.c of the inhabitants. On the identical time, “humanitarian wants are growing to unprecedented ranges in Myanmar, with an estimated 19.9 million folks in want of help in 2025.”
BMI emphasised the affect of pure disasters, significantly Hurricane Yagi, which hit the nation in September, ensuing within the lack of “tons of of 1000’s of hectares of crops” throughout 9 states and areas. It stated that inflation will persist, as a result of “extreme meals shortages,” significantly in areas which are experiencing probably the most energetic battle, together with Rakhine State, the place the continuing battle between the Myanmar armed forces and the Arakan Military has led to shortages of fertilizer and commerce disruptions. BMI cited a current U.N. report that meals manufacturing in Rakhine is “anticipated to fulfill solely 20.0% of native wants by mid-2025.”
The BMI outlook makes clear that the junta’s insurance policies have solely worsened the scenario. Specifically, the army’s pressured conscription drive, first introduced in February 2024, has led 1000’s of potential conscripts to flee the nation, straining additional the nation’s “quickly depleting workforce.” In response to the AFP news agency, “greater than 1,000,000 folks have fled Myanmar’s brutal civil struggle to hunt shelter and work in neighboring Thailand.”
The exodus “is not going to solely result in a pointy decline in productiveness throughout key sectors but in addition solid an extended shadow over the market’s prospects even when the civil struggle inevitably ends,” BMI acknowledged.
It additionally stated that the junta’s price caps on daily necessities corresponding to eggs, fish, meat, and cooking oil may have “unintended penalties,” pushing these items into casual markets the place they might be bought at inflated costs, “additional intensifying inflationary pressures.”
All advised, the BMI report, just like the World Financial institution’s most up-to-date financial outlook, exhibits few ways in which Myanmar can pull out of its present financial demise spiral. So long as the army stays intact, and the resistance to its rule persists, the nation’s financial system will proceed to atrophy, with impacts that might set the nation again by a technology.
