Economy tanks as protests over coup choke trade
With a tea shop right next to key protest zones in Myanmar’s biggest city, Soe is never quite sure whether he should keep the business open.
If protesters enter to evade authorities, he risks getting shot, arrested or having his property destroyed as the military and police hunt them down. But if he turns away fleeing demonstrators, he may face a backlash on Facebook and a boycott of his tea shop, among hundreds in Yangon that have long served as de facto community centers.
“Now we can’t open our shop on a daily basis but we have to pay regular rental fees, municipal fees, labor wages,” said Soe, using only his first name because of concerns for his personal safety. “Many tea shop owners in Yangon are not sure how long they’ll be able to survive if this crisis continues.”
Small businesses like Soe’s are on the front lines of an economy now seemingly in free fall after a group of generals seized power on Feb. 1. The junta has killed more than 700 people since then, driving away foreign investors as Western nations order new sanctions. Their opponents in the Civil Disobedience Movement, meanwhile, are pushing to tank the economy to deprive the military of financial resources.
Shipping lines have suspended operations as truck drivers strike, leaving cargo containers trapped at the ports. Restrictions on cash withdrawals have businesses struggling to pay employees. The military has restricted internet access, making it harder to reach customers.
And thousands of civil servants aligned with the protesters are refusing to work, leaving areas with limited public services.
Altogether it amounts to a speedy erosion of the economic gains Myanmar reaped after investors rushed in a decade ago following a shift toward democracy. An economy that averaged growth rates of more than 6% over the past 10 years — more than doubling gross domestic product — is now projected by the World Bank to shrink 10% in 2021, by far the worst in Asia as countries rebound from a pandemic-induced slump.
“We are deeply concerned,” said Aaditya Mattoo, the World Bank’s chief economist for Asia. “A 10% contraction in growth for a poor country seems to me disaster enough already. And when I add to it all the other costs, which have an impact on longterm growth, I think we have a pretty dismal scenario.”
Some analysts are expecting things to get even worse: Fitch Solutions is projecting a “conservative” 20% contraction for the 202021 fiscal year. It said this month the rising death toll combined with increased social instability means “all areas of GDP by expenditure are set to collapse.”
“There is no worstcase scenario on the economy which we can rule out,” Fitch said.