Myanmar’s economy is crumbling and experts predict more illegal trade and zero growth in 2022.
The Southeast Asian country’s economy has been in rapid decline following the chaos of February’s military coup. Thousands of citizens have gone on strike, refusing to work under military rule, including healthcare workers, lawyers, teachers and engineers.
Days after the coup took place nine months ago, the Civil Disobedience Movement (CDM), was formed. It is a large-scale labor strike campaign with a mission to resist the junta by denting the military-controlled economy.
Shortly after the movement began, Myanmar’s bankers joined and refused to go to work. That prompted cash flow problems for the population and businesses, but also the military.
As the year has gone on, any military-owned or affiliated businesses faced large boycotts. Global brands have halted orders with Myanmar’s manufacturing industry, while Chinese-made products have been boycotted amid allegations that China supports Myanmar’s military junta. Beijing had blocked a U.N. Security Council statement condemning the coup.
Fearing for their lives, thousands of workers fled their rural homes because of the increased fighting between national soldiers and opposition groups. Factories and businesses have also closed, leading to increasing unemployment and lost income.
Gwen Robinson, an editor at Nikkei Asia, sponsored an event hosted by the Foreign Correspondent’s Club of Thailand (FCCT) in Bangkok in November, that outlined some of the economic woes in Myanmar.
“It’s clear we are seeing both boom and bust in Myanmar right now. There is a booming illicit economy… and there are growing perceptions of a collapsing licit or domestic open economy,” she said.
With a continuing crackdown, Myanmar’s military enterprises have faced heavy trade sanctions by the U.S., Britain and the European Union. It’s put pressure on military leadership.
“General Min Aung Hlaing [has spoken of] increased self-reliance, urged people use less fuel, increase use of public transport and walking, consume less edible oil, reduce imports and consume less rice. There is a creeping paranoia by the junta that the economy is crumbling around them, and seem powerless to stop the rot,” Robinson said.
Myanmar’s agricultural, marine, mineral and manufactured exports have slowed, while raw materials and investment imports have also been in decline since 2020. Myanmar business registrations also have fallen by 44% this year, while there have been rapid changes in the valuation of Myanmar’s currency, the kyat, against the U.S. dollar in recent months, Robinson’s researched outlined.
A report by the International Labor Organization (ILO) states there were 1.2 million job losses in the second quarter of 2021. All sectors of Myanmar’s economy were affected, with the tourist, hospitality, construction and garment sectors hit the worst.
But the sliding economy has been apparent since the beginning of last year’s COVID-19 pandemic, Robinson said.
“The economy was beginning to collapse well before the coup due to these very harsh lockdowns that closed businesses and choked the economy. The resurgence of COVID-19 has hit the economy,” she added.
Myanmar has a population of nearly 55 million. About 25% of the population is fully vaccinated against COVID-19. Since the pandemic began, the country has recorded more than 522,000 cases and 19,000 deaths, according to Johns Hopkins University data.
In July the World Bank had forecasted Myanmar’s legitimate economy would decline by 18% in 2021. Fitch Solutions, a U.S. credit rating agency, has revised its growth forecast for Myanmar for 2022 by predicting there will be a -4.4% contraction.
Political analyst Aung Thu Nyein believes any positive recovery of Myanmar’s economy is unlikely.
“Other neighboring countries show a sign of recovery from the COVID-19 crisis. I don’t see a sign of recovery in the coming year for the Myanmar economy. It is very likely to go back to the status of “the last frontier in Asia” as some people claimed Myanmar in its initial opening in 2012. There seems no potential credible investment in 2022,” he told VOA.
The analyst admitted that a little growth in trade could be possible because borders are expected to open with China and Russia continuing to supply equipment to the military.
But Jeremy Douglas, the Regional Representative for the United Nations Office on Drugs and Crime, said as the legitimate economy declines, the illicit drug trade among crime groups is growing.
Also speaking at the FCCT event on November 17, Douglas said the illicit economy, including heroin and methamphetamines, is “diverse.”
“The synthetic drug economy has proven its ability to expand very fast, so it really ramped up. This is against the background of the conditions on the ground, and these conditions are perfect for these folks to do this business, to grow that illicit economy as the licit declines,” he said.
Douglas said Myanmar’s Shan state is a production point for illegal drugs being distributed across the Asia Pacific region and added as the market economy declines in Myanmar, those out of work are being lured to work within the drug trade.
“It is a huge economy already, pre the coup, even after COVID-19, it continued to expand. As the transport connections start expanding, you’re going to see more connection to those markets and the push from supply go further and further from the point of production, which is a concern,” he added.
Myanmar, formerly known as Burma, gained independence in 1948 from Britain but most of its modern history has been governed under military rule.
In the November 2020 general elections, Aung San Suu Kyi’s democratic government won convincingly, but the military contested the results, claiming widespread electoral fraud without evidence. On February 1, the military removed the government, while arresting Suu Kyi and President Win Myint, who both face mounting criminal charges.
Anti-coup demonstrations began shortly after, with thousands taking to the streets. But the military has violently cracked down on dissidents, with at least 1,300 killed, according to the Assistance Association for Political Prisoners (AAPP).
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