Myanmar’s economic outlook is bleak and may continue to shrink in 2025

A recent report released by the World Bank revealed Myanmar's current severe economic situation and predicted that its economy will shrink further in 2025. The outlook comes against the backdrop of the country's ongoing armed conflict, in which rebel groups have made significant gains against the military junta. The report pointed out that Myanmar's gross domestic product (GDP) is expected to shrink by 1% in the fiscal year ending in March 2025, which is a significant reduction from the previous moderate growth forecast. It is worth noting that the World Bank’s June 2024 forecast had expected economic growth in the 2024-2025 fiscal year to be 2%, but the latest report adjusted it to 1%.

The report, titled Myanmar Economic Monitor, paints a picture of multiple crises in Myanmar. The report pointed out that factors such as intensified conflicts, frequent natural disasters, rapid currency depreciation, high inflation, and immigration issues have jointly had a serious impact on Myanmar's formal economy. "Economic conditions have further deteriorated over the past six months," the report said, "with recent flooding exacerbating existing challenges posed by armed conflict and macroeconomic fluctuations."

First, Myanmar’s economic prospects have been hit one after another as armed conflicts have escalated over the past year. In October 2023, the "Operation 1027" launched by the "Three Brothers Alliance", an ethnic armed group, dealt a heavy blow to the Myanmar military government. Northern Shan State and Rakhine State have become the hardest-hit areas of the conflict. The fighting has caused heavy losses to the Myanmar military and may have long-term consequences for its ability to control. At the same time, the United Nations estimates that 1.5 million people have been forcibly displaced since relevant operations began in 2017, bringing the total number of internally displaced persons to 3.5 million, equivalent to 6% of Myanmar's total population. Currently, more than half of Myanmar’s towns and cities face intense conflict, and supply chains and border trade continue to be disrupted. Overland trade between Myanmar and China, for example, has almost come to a standstill amid recent resistance offensives. The report emphasizes: "The intensity and breadth of the armed conflict remain high, which has had a serious impact on people's lives and livelihoods, while disrupting production and supply chains, making the economic outlook more uncertain." The agriculture, manufacturing and service industries have all been hit hard. , the main reasons include shortage of raw materials, unstable power supply and weak domestic demand.

Secondly, in addition to man-made conflicts, Myanmar is also suffering from natural disasters. Typhoon Yagi and monsoon-induced floods caused severe damage across the country. According to statistics, about 2.4 million people in 192 cities and towns have been affected. These disasters further weaken already fragile household economies. As of October 2024, approximately 14.3 million people in Myanmar faced severe food insecurity, a significant increase from 10.7 million a year ago. The report believes that this increase is mainly due to rising food prices and supply shortages. Amid the ongoing unrest, migration has become a choice for many Myanmar people to cope with the crisis. Especially after the military government announced its conscription plan in February 2024, the number of illegal immigrants increased significantly. The plan is designed to replenish the army but also includes nearly a quarter of Myanmar's working-age population for conscription.

Finally, Myanmar migrants mostly choose to go to Thailand and Malaysia, where their incomes are typically two to three times what they earn at home. However, this labor outflow poses risks to Myanmar’s long-term development. According to the survey, the loss of highly skilled workers is particularly severe in fields such as construction, information and communication technology and administrative services, with nearly a third of professionals expressing interest in moving overseas. The report warns that the situation could have long-term negative consequences for Myanmar's human capital.

To sum up, the future of Myanmar’s economy is full of uncertainty. The World Bank noted that even if the conflict does not escalate, economic growth may still be sluggish in 2025. The report specifically mentioned that potential risks include further deterioration of the conflict, possible elections in 2025, and severe natural disasters. These factors are likely to lead to lower output across multiple industries, as well as prolonged disruptions to transport and logistics networks, as well as border trade. The report concluded: "Challenges facing Myanmar's economy cover almost every sector, and future economic recovery may require longer time and more resources." The current situation has had a profound impact on Myanmar households, businesses and national development, How to deal with these multiple crises will determine Myanmar's future direction.