Myanmar economy may contract up to 20% as crisis looms

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, the 43-year-old risks getting shot, arrested or having his property destroyed as the military and police hunt them down. “Now we can’t open our shop on a daily basis but we have to pay regular rental fees, municipal fees, labour wages,” said Soe.

Small businesses are on the front lines of an economy now seemingly in free fall after a group of generals seized power. 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.

An economy that averaged growth rates of over 6 per cent over the past 10 years is now projected by the World Bank to shrink 10 per cent in 2021, by far the worst in Asia as countries rebound from a pandemic-induced slump. “A 10 per cent contraction in growth for a poor country seems to me disaster enough already,” said Aaditya Mattoo, the World Bank’s chief economist for Asia. Some analysts are expecting things to get even worse: Fitch Solutions is projecting a “conservative” 20 per cent 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 worst-case scenario which we can rule out,” Fitch said.