1. Development

The Republic of the Union of Myanmar, also known as Burma (the official name until 1989) is the largest country in Southeast Asia (more than twice the size of Italy) with about 55 million inhabitants. Myanmar is divided into seven states and seven regions.

Myanmar experienced a period of rapid economic growth during the liberalization period from 2011 to 2021. However, the impact of the Covid-19 pandemic, the destruction brought by Cyclone Mocha (May 2023) and, above all, the military coup in February 2021 and the subsequent state of civil conflict, which is still ongoing, has severely slowed the country's economic growth.

According to the World Bank 1, although Myanmar's economic conditions stabilized in the first half of 2023, businesses continue to struggle, household incomes remain weak, and food security has become a growing concern.

Economic activity is slowly improving, but from a low base. GDP is forecast to grow by 3%, still about 10% lower than in 2019. Over the next year or two, the economy is expected to expand slowly, but with the benefits of growth unevenly distributed among households, firms, and industries. Average annual inflation is forecast to fall to 14% per year from 18.3% in the previous year, and to decline further in 2024.

The exchange rate has been stable for much of the past six months, food and fuel price inflation has moderated, manufacturing output and orders have increased, and sales of local products have reportedly increased. Passenger and freight transport volumes are increasing, and although agricultural production has weakened, profitability is improving as producer prices rise and input costs fall, suggesting that output could be higher in the coming seasons. On the other hand, power outages, conflicts, and logistics disruptions continue to limit productivity, while investment indicators remain very weak.

Furthermore, with high food prices and persistently weak labor markets, household incomes remain under significant pressure. Employment and income impacts have been particularly severe in states and regions most affected by the ongoing conflict. The combination of weak employment, fewer hours worked, and a higher incidence of casual or self-employed work has reduced the earning capacity of many households. Wages declined by 15 percent in real terms on average between 2017 and 2022, and nearly half of Myanmar households reported that their incomes declined during 2022.

As a result, food security and nutrition appear to have deteriorated during the first half of 2023, with coping mechanisms increasingly strained. According to a May 2023 World Bank survey, 48 percent of farm households are concerned about not having enough food, up from about 26 percent in May 2022. The survey also shows a notable decline in consumption of nutritious foods such as milk, meat, fish, and eggs.

Potential risks to the growth outlook include a possible worsening of internal conflict, further declines in power generation, persistent inflationary pressures and a further deterioration in the business environment.

The destruction caused by Cyclone Mocha in May , which caused significant damage in states and regions where humanitarian needs were already significant, was a reminder of Myanmar's vulnerability to natural disasters.

In the medium to long term, current growth rates would not see Myanmar return to pre -pandemic output levels until the end of the decade. This would imply continued pressure on household incomes, which are already severely strained by high import prices and a weak labor market that has limited the potential for employment and wage gains. Lost months of education, rising unemployment, significant emigration, and internal displacement are expected to reduce already low levels of human capital and hurt productive capacity in the long term. Capital investment has remained very weak over the past two years and will also dampen economic growth. And the business environment is unlikely to improve substantially as long as power shortages, logistics disruptions, trade and currency restrictions, and regulatory uncertainty persist.

Before the return to military control in February 2021, a number of countries and international financial institutions helped fill Myanmar’s infrastructure gap. Some of this assistance has come in the form of development aid in recent years, with OECD data from 2018 indicating that Japan was by far the largest donor, followed by the World Bank, ADB, Germany, the United States, and South Korea; China (including Hong Kong) has also long been a major driver of Myanmar’s economy.

The military coup of February 2021 had an immediate impact on many internationally supported projects: many of these were halted, although some were continued, most notably a rail corridor linking China to the Indian Ocean through Myanmar 2.

Before the coup, the Myanmar government had begun planning for the country’s green and sustainable development, with several new strategies and actions. The Myanmar Sustainable Development Plan 2018-2030 clearly integrates environment and climate change as one of the five pillars of development. The “Myanmar Climate Change Strategy and Action Plan 2018-2030” promotes climate action, while Myanmar’s Nationally Determined Contribution (NDC) outlines priority mitigation and adaptation actions. The National Environment Plan 2018-2030 promotes the integration of environmental concerns across sectors, and the Environment Conservation Law 2012 , supported by the Environment Conservation Regulations 2014 and other regulations, promotes greening of investments by assessing and mitigating adverse environmental impacts.

It remains to be seen how the military government intends to proceed with these strategies.