Myanmar economy stymied by forex, import curbs, World Bank says

Myanmar’s economic recovery is being hampered by a shortage of foreign exchange, import restrictions and power outages, according to the World Bank. 

The business environment remains challenging and many firms are finding it difficult to access foreign exchange, obtain trade licenses, import raw materials, and adapt to logistics constraints, the World Bank said in its country report released on Tuesday. 

The assessment serves as a warning against complacency to an economy, which the development lender said showed tentative signs of stabilization in the first half of 2023. Among the positives for Myanmar it listed were a broadly stable market exchange rate, cooling inflation and an uptrend in many economic indicators.

Still, exporters are facing challenges from a combination of waning external demand, an overvalued official exchange rate, and tighter currency conversion requirements, the bank said, maintaining its January growth forecast of 3% for the year ending Sept. 30. The economy is likely to return to its pre-Covid levels in 2027 or 2028, said Kim Alan Edwards, bank’s Senior Economist for Myanmar and Thailand. 

Myanmar’s economy was first devastated by the pandemic and aggravated by economic sanctions in the wake of the military coup in 2021 that toppled Aung San Suu Kyi-led civilian government. While the central bank switched to a fixed exchange regime last year, open market rates for dollars have been 25-30% higher than the official rate, hurting businesses. 

Power outages have worsened since early this year, with 42% of all firms and over half of manufacturing firms reporting electricity blackouts as the most significant constraint to their operations in March.