Myanmar’s economy is set to contract further in 2025, the World Bank said in its latest outlook, after a year of conflict in which resistance groups made significant inroads against the country’s military junta.
The latest issue of the Myanmar Economic Monitor, released yesterday, offers a grim complement to the reports emerging from the country’s conflict zones. According to the report, Myanmar’s GDP is expected to contract by 1 percent in the fiscal year ending March 2025, a downward revision from the previous projection of modest growth.
This downgrade comes after the last Myanmar Economic Monitor, released in June, in which the World Bank downgraded its forecast for the 2024-2025 financial year from 2 percent to 1 percent.
The World Bank report outlined a multifaceted crisis in which ongoing conflict, natural disasters, rapid currency depreciation, high inflation, and outward migration have combined to produce an atrophying effect on the formal economy.
“Economic conditions have deteriorated further in the past six months, with recent devastating floods adding to ongoing challenges associated with armed conflict and macroeconomic volatility,” the report stated.
The World Bank’s steady downgrading of Myanmar’s projected economic growth over the past year reflects the intensification of the country’s armed conflicts. In particular, Operation 1027, an offensive launched in October 2023 by the Three Brotherhood Alliance of ethnic armed groups, has inflicted a series of major defeats on the Myanmar military, particularly in northern Shan State and Rakhine State, both of which seem likely to evolve into irrecoverable losses.
Since the beginning of Operation 2017, the U.N. estimates that 1.5 million people have been displaced, increasing the total number of internally displaced people to 3.5 million – around 6 percent of the country’s population. With “over half” of Myanmar’s townships experiencing active conflict, supply chains and the border trade have been subject to consistent disruptions. In the case of China, overland trade has virtually come to a halt amid the latest resistance offensives.
“The level and intensity of armed conflict remains high, severely affecting lives and livelihoods, disrupting production and supply chains, and heightening uncertainty around the economic outlook,” the report stated.
The report notes significant challenges in virtually every sector of Myanmar’s economy. Agriculture, manufacturing, and services are all suffering due to persistent shortages of raw materials, unreliable electricity supplies, and slackening domestic demand. Adding to these compounding crises, recent Typhoon Yagi and heavy monsoon rains have caused severe flooding across Myanmar, affecting 2.4 million people in 192 townships.
These compounding impacts have had a serious impact on Myanmar households. The report cited statistics claiming that 14.3 million people – around a quarter of the population – were experiencing acute food insecurity as of October 2024, up from 10.7 million people a year earlier. This has been “driven mainly by food price inflation and supply shortages,” it said.
The Monitor focused particularly on the rising migration, which the report said has become “an increasingly important coping mechanism” for many people in the current chaotic and uncertain circumstances. This has risen over the past year, particularly illegal movement prompted by the junta’s imposition of conscription on young people in February. The military council’s conscription plan, announced in February in a bid to replenish its thinning ranks, has suddenly made a quarter of the prime working age population eligible for enlistment.
While migration has given people a means of escaping the conflict and providing for their families – Myanmar migrants to Thailand and Malaysia typically earn two to three times what they would earn inside the country – this outward flow of labor “poses some risks to Myanmar’s longer-term development,” the Bank noted.
It cited survey results showing that nearly a third of higher-skilled workers in fields such as engineering, ICT, administrative services, and construction-related fields “are both willing and able to migrate abroad, with potential implications for Myanmar’s stock of human capital.”
All told, the longer-term outlook for Myanmar’s economy remains grim. “Even assuming no further escalation in conflict, growth is expected to remain subdued the following year,” the report stated, adding that “the risks to this already bleak outlook are tilted to the downside.”
“A further escalation in conflict, including in the run up to possible elections in 2025, or another severe natural disaster could depress output across a range of sectors,” it stated. “Such shocks could also result in more prolonged disruptions to transport and logistics networks and border trade.”