Myanmar’s economy will be ‘tested’ by coup aftermath – World Bank

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Jan 28 (Reuters) – Myanmar’s economy will remain critically weak for much of 2022 and is being “severely tested” by the fallout of a coup a year ago, but there are recent signs of stabilization in manufacturing, according to the World Bank and in export .

In its latest update on Myanmar’s economy, the World Bank forecasts growth of 1% for the year to September 2022, weighed down by the impact of the pandemic and the military’s ouster of an elected government on February 1, 2021.

Myanmar’s economy has faltered since the coup, and the junta’s crackdown on its opponents and the ensuing backlash from armed groups has led to a withdrawal of foreign companies concerned about political risks, sanctions and damage to reputation.

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The World Bank said there were significant supply and demand problems, cash flow constraints for companies and limited access to credit, while half of the companies it surveyed reported difficulties over the past year due to a sharp rise depreciation the kyat currency.

“The near-term outlook will depend on the evolution of the pandemic and the impact of the conflict, along with the degree to which foreign exchange and financial sector restrictions remain in place, as well as disruptions to other essential services, including electricity, logistics and digital connectivity,” he said the World Bank in its January Economic Monitor.

Myanmar’s junta has blamed last year’s economic crisis on foreign-backed companies “Sabotage”.

The military government said Thursday it had approved $3.8 billion in foreign investment since the coup, in what it described as a return to stability and confidence in its economic potential.

The World Bank said events since the coup are likely to limit Myanmar’s growth potential, with most indicators suggesting that private investment has fallen sharply while import costs have risen and kyat-denominated earnings are worth less in foreign currency.

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writing from Martin Petty; Editing by John Geddie

Our standards: The Thomson Reuters Trust Principles.

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