世界发展银行-Myanmar-Economic-Monitor,-July-2021---Progress-Threatened_-Resilience-Tested_52页_2mb

Myanmar Economic Monitor - July 2021

Core Content

The Myanmar Economic Monitor (MEM) is a semi-annual report published by the World Bank's Myanmar office, analyzing the economic situation in the country. The July 2021 edition highlights the significant economic challenges faced by Myanmar due to the February 2021 military coup and the third wave of the COVID-19 pandemic in June and July 2021. These dual shocks have severely tested the country's economic resilience, leading to a broad-based contraction across all sectors and a projected GDP decline of 18% in FY2021.

Main Points

1. Economic Impact of Dual Shocks

• Military coup (February 2021): The coup significantly disrupted the economy, which was already weakened by the second wave of the pandemic in late 2020.
• Third wave of COVID-19 (June-July 2021): The surge in cases and positivity rates has worsened public health and economic conditions.
• Key sectors affected:
  • Agriculture: Declined by 10.5% in FY2021.
  • Industry: Declined by 20.3% in FY2021.
  • Services: Declined by 19.9% in FY2021.
• Overall GDP contraction: Expected to be 30% smaller in September 2021 compared to pre-shock levels.

2. Impact on Economic Activity and Prices

• Reduced mobility: Mobility to retail, transport, and other services dropped significantly from pre-pandemic levels.
• Lower incomes and employment: A 18% drop in exports and 26% drop in imports in the first five months of FY2021.
• Inflation: Projected to rise to 6% for FY2021, with fuel prices increasing by 50% since January 2021.
• Banking and financial sector disruptions: Liquidity shortages, restricted internet access, and a 23% depreciation of the kyat against the US dollar since January 2021.
• Price volatility: Price increases for essential goods due to import restrictions and currency depreciation.

3. Impact on Firms

• Business closures and disruptions: Over 75% of firms reported the impact of the coup was worse than during the 2020 pandemic.
• Decline in sales and profits: Many firms experienced reduced sales and profits, with 4 to 5% of total employment potentially lost.
• Operational constraints:
  • Reduced operating capacity by region.
  • Delayed payments and cash flow shortages.
  • Restrictions on credit access.
• Sector-specific impacts:
  • Retail and wholesale trade: Reduced mobility and lower demand led to a 33% drop in vehicle sales.
  • Tourism and hospitality: 39% of businesses shut down between February and early April 2021.
  • Manufacturing: PMI declined, and input prices rose.

4. Trade and Investment

• Trade decline: Myanmar's trade volume dropped in FY21, with all import sub-groups decreasing.
• FDI commitments: Fell significantly in the first seven months of FY21, affecting capital stock, foreign skills, and technology.
• Exchange rate volatility: The kyat reference rate has depreciated, with a large gap between reference and market rates.
• Border closures: Impacted external trade, as border crossings were closed by neighboring countries.

5. Fiscal and Public Sector Impacts

• Low tax revenue: Tax revenues are among the lowest in the world, at 6% of GDP.
• Fiscal contraction: The fiscal balance is expected to worsen to -8.5% of GDP in FY2021.
• Public sector debt: Increased to 55.2% of GDP in FY2021, up from 38.8% in FY2019.
• Public service disruptions: 92% of total expenditure is covered by ministries and SEEs, but limited capacity to deliver services due to health and education closures.

6. Household Welfare

• Poverty increase: The poverty rate could more than double by early 2022.
• Food security risks: Households are reducing consumption, with savings drained and nutritional impacts expected.
• Employment decline: One million jobs could be lost, with 4-5% of total employment in 2019.
• Education disruption: School closures have affected human capital development, with uncertainty around re-opening and attendance rates.

Key Information

• The military coup in February 2021 led to protests, strikes, and service disruptions, severely impacting economic activity.
• The third wave of the pandemic in June and July 2021 has caused high case numbers, community transmission, and increased deaths.
• Liquidity and currency issues: Physical kyat currency is in short supply, and US dollars are difficult to access.
• Fiscal constraints: Low tax revenue and limited deficit financing options have constrained public spending.
• Long-term risks: The dual shocks could jeopardize development progress over the past decade, with reduced productivity, lower investment, and increased reliance on extractive activities.

Conclusion

The Myanmar Economic Monitor underscores that the economic situation is deteriorating, with severe impacts on livelihoods, trade, investment, and public services. The combination of the coup and the pandemic has created a highly uncertain environment, with long-term consequences for economic growth and development. The World Bank warns that without policy stability and reforms, the economic outlook remains bleak, and poverty and inequality could deepen significantly in the coming months.