Myanmar’s economy is in freefall, with empty factories, closed banks and a failing internet

SINGAPORE — Bank branches in Myanmar are closed and government workers boycott work. Factory workers fled to their rural homes, and foreign companies sent their workers overseas by air. The Internet is largely cut off.

More than two months since the military seized power in a coup and unleashed a deadly campaign to quell protests, the economy is collapsing, with the World Bank and others expecting a double-digit contraction during this year. The upheaval is erasing the significant gains the country had made in reducing poverty and frightening foreign companies and tourists who had done much to improve Myanmar over the past decade.

It is already one of the poorest countries in Asia. Six million people live on less than $ 3.20 a day, a poverty line for lower-middle-income countries like Myanmar. A quarter of the country’s children are far too short for their age due to inadequate nutrition.

There is a reason for this: For half a century Myanmar has been ruled by military generals who adopted disastrous policies. The situation has started to change steadily over the past decade, as a democratic opening brought a partially civilian government to power and more international investment poured in. According to one measure, poverty fell to 24.8 percent in 2017, from 42.2 percent in 2010, according to World Bank data.

The progress of the past decade is now being reversed. After the coup, which toppled an elected government, the World Bank says the number of people living on less than $ 3.20 is expected to increase by 30% in 2021. That’s 1.8 million more poor in one year.

A food drive for low-income households in Yangon.


Agence France Presse / Getty Images

The World Bank, which predicted 2% growth before the coup for the 12 months to September 2021, now expects a 10% drop in gross domestic product. Others say the drop could be steeper, with analyst firm Fitch Solutions forecasting a 20% drop as people buy less and low tax collection cracks government spending.

Since the coup, the streets of Myanmar have been filled with protesters demanding a return to democracy, but they have faced severe oppression from the military.

More than 600 people have been killed so far, including children shot in their yards or at home, according to the Association for Assistance to Political Prisoners, a monitoring group.

Part of the economic disruption is deliberate. Civil servants, bank workers, and factory and port workers are not going to work, in an effort, they say, to prevent the military regime from ruling. KBZ, the country’s largest private bank, has only opened 14 of its more than 500 branches due to worker strikes, according to its website.

“Without having enough staff and human capacity, it is not possible to run the economy,” said Kaung Htet, a 30-year-old relationship manager at a retail bank, Myanmar Oriental Bank, who is not not come to work since February.

On Wednesday, the coup leader and head of the armed forces, Chief General Min Aung Hlaing, was quoted in a state newspaper as saying that the civil disobedience movement is “destroying the country.”

Protesters marched in Yangon on April 9.


Associated press

The central bank has threatened to impose fines on banks that fail to reopen, according to two people who work in the banking industry. KBZ last month sent a notice to employees saying it is in a “no-win situation where if we don’t open the regulator will step in and open the bank for us,” according to a copy seen by Wall Street. Newspaper.

But the central bank is struggling to bring in its own staff. About 300 central bank employees have been suspended by the institution in Myanmar’s two largest cities for refusing to work and some have returned to their family villages, said a senior bank official who had been absent from the office since February. She fears being arrested by police amid widespread arrests, she said.

Striking officials have formed teams to make housing and financial assistance available to colleagues who also refuse to work and have been evicted from public housing as a result. Zaw Wai Soe, a surgeon and prominent leader of the movement, said some supporters were selling land to raise funds and wealthy citizens abroad were contributing.

The goal is that “step by step the military machinery weakens and stops,” he said in a speech posted on his Facebook page last month.

However, some citizens who have stayed at home are starting to feel the pressure. A member of parliamentary staff said he had drawn on savings, but colleagues with large families wondered whether to return to work. A 30-year-old finance employee in Yangon said his company asked employees to return in May.

The economic pain is widespread. The garment industry, which accounts for around a quarter of the country’s goods exports, is losing business as big brands like Sweden’s Hennes & Mauritz AB and Italian Benetton suspend new orders. Protests and violent crackdowns in industrial areas pushed factory workers back to their villages, causing severe shortages.

Stores closed early in Yangon on April 2 following the military coup.


str / Agence France-Presse / Getty Images

Large-scale internet restrictions, including nightly blackouts and major disruptions to mobile and wireless broadband connectivity during the day, cripple businesses ranging from finance to hospitality. A restaurant owner in Yangon said he had relied on online orders to deal with the pandemic, but those orders have now all but ceased, slashing sales by 70%.

International tourism, which has quintupled over the past decade, is in shock. The struggling restaurateur, who also runs a travel agency for European and North American visitors, said he avoided staff layoffs during the pandemic, instead paying employees half their standard salary for reduced hours . Now he’s getting ready to let the people go.

Write to Jon Emont at [email protected]

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