It has been apparent for some time that Myanmar’s post-coup crisis has pushed the country toward a dramatic economic collapse. More evidence of the extent of the economic fallout is offered by a new survey of Myanmar-based companies, which found that the two months after the military’s February 1 coup dealt a heavier blow to the country’s economy than a year of COVID-19 restrictions and lockdowns.
Released yesterday, the survey, which was conducted by 10 foreign chambers of commerce in Myanmar, quizzed 372 companies about the impact of the pandemic and the coup. These included 182 from Japan and 115 from Western nations, in addition to 54 local firms and 17 from Myanmar’s Southeast Asian neighbors.
Remarkably, nearly 13 percent of the companies surveyed have ceased all activities since the coup. Around a third of respondents reported a 75 percent-plus reduction in their activities in Myanmar since the military coup in February, while 21 percent said they have reduced activities by between 50 percent and 75 percent. Just 5 percent of respondents reported that the crisis had had no impact on their business activities.
According to the survey report, the coup “will give way to additional terminations of employment contracts and reductions of salaries in the coming months.” This will likely produce “a long-lasting social crisis, a general reduction of the purchasing power and standards of living of workers, and a dramatic increase of the unemployment rate in the months to come.”
Since the Myanmar military’s seizure of power on February 1, hundreds of thousands of civil servants have walked off the job and the country has been seized by violent crackdowns on the protests that are now taking place across the country. At least 772 people have been killed by security forces since February, and nearly 5,000 have been arrested for anti-coup resistance.
The sudden onset of political crisis has forced a dramatic reassessment of economic outlooks for the coming year. Last month, Fitch Solutions, an affiliate of the global rating agency Fitch Ratings, revised its forecast for the financial year to September, published a briefing predicting that Myanmar’s economy would shrink by an astonishing 20 percent, from a pre-coup forecast of 2 percent growth. The World Bank has predicted the economy to shrink by around 10 percent, down from a projected growth rate of 5.9 percent.
Among the impacts cited by respondents to the joint survey were interruptions to banking services and payments (77 percent), the disruption to internet connections (70 percent), and staff being unable to travel freely (65 percent).
Asked about their intentions for the rest of 2021, 33 percent of survey respondents said they would maintain operations without further investment, while 15 percent said they would progressively reduce operations in Myanmar. A further 39 percent of respondents said they would wait and see how the situation evolves.
The joint survey ended on April 9, and one can only assume things have worsened further in the month since. Indeed, the report posits a worst-case scenario in which there is no improvement in the situation by the end of the financial year in September. In that case, “it is possible to foresee that the number of companies which will terminate all operations, terminate employment contracts, or reduce operations and salaries may actually double” by the end of the year.
The survey report offers statistical backing for the anecdotal evidence that increasing numbers of foreign firms are being forced to reassess their presence in Myanmar, either because of practical disruptions or because of the reputational risks associated with doing business under the junta.
Earlier this week, the Norwegian telecommunications firm Telenor announced that it was fully impairing its Myanmar operation, which was launched in 2014, seeing “limited prospects of improvement going forward.” While Telenor won’t be ceasing operations in the country, it has effectively written its investments there off as a loss.
With no clear end in sight for Myanmar’s crisis – or even the beginnings of an end – the real extent of the economic damage could end up confounding even these grim predictions.