Myanmar’s Economy Struggles Amidst Civil Strife and International Sanctions
Myanmar, once seen as a rising star in Southeast Asia, is now grappling with a multitude of challenges that have left its economy in shambles. The military takeover three years ago has not only brought about civil strife but has also resulted in a tightening vise of international sanctions. As a result, the country’s economy has shrunk by 10% since 2019, undoing years of progress.
The generals who seized power in Myanmar increasingly rely on illicit revenues from gem mining and logging to fund their battles against a broad popular resistance movement. This reliance on illegal activities has further exacerbated weak law enforcement, corruption, and poverty, leading to a surge in drug production and trafficking, online scam rings, and other criminal activities.
The consequences of the military takeover have been devastating for the economy. Export manufacturing and other mainstream business activities have suffered, leading to the loss of millions of jobs. The economy is projected to grow at a meager 1% pace this year, and approximately half of the population is estimated to be living in poverty. Moreover, over 2.6 million people have been displaced by civil war.
Myanmar’s economic woes can be traced back to decades of mismanagement and isolation under military administrations. However, there was a glimmer of hope in the early 2010s when reforms were implemented, loosening the military’s grip on power and opening the economy to foreign investment. Unfortunately, this era of growth and industrialization was abruptly halted by the military’s takeover, which sparked peaceful protests that eventually turned into armed resistance against the army’s use of deadly force.
The fighting between pro-democracy guerrillas, ethnic minority armed groups, and the military has intensified in recent months, putting immense pressure on the military. While conditions in Yangon, Myanmar’s largest city, may appear calm to recent visitors, the United Nations estimates that nearly 18 million people in the country are in need of humanitarian aid.
The economic impact of the military’s inept policies is reminiscent of North Korea, where basic necessities for the population are scarce. The depreciation of Myanmar’s currency, the kyat, against major currencies has led to a rise in prices for essential goods. Additionally, restrictions on trade and movement, as well as active fighting, have disrupted farming, further exacerbating food insecurity.
Labor rights have also deteriorated under the army-led administration, with crackdowns on union activities. The International Labor Organization has called for the release of all labor activists who have been unjustly detained. The future well-being of Myanmar depends on a peaceful transition to full democratic rule, which begins with the release of these activists.
Rights groups have criticized fashion brands for sourcing from factories in Myanmar that employ child workers, engage in forced overtime, and have unsafe working conditions. The garment industry alone has faced 401 allegations of labor and human rights violations affecting tens of thousands of workers.
Foreign direct investment in Myanmar has plummeted since the military takeover. Last year, the military administration reported only $602 million in foreign direct investment, with the majority going to the energy sector. This is a stark contrast to the peak of $4.8 billion in 2017 and $1.2 billion in 2022. Sanctions on key sectors of the economy have stifled investment, and the Office of the U.S. Trade Representative has issued a business advisory warning about the risks of doing business in Myanmar.
In addition to economic challenges, Myanmar is also grappling with transnational criminal syndicates that have expanded into its border regions. These syndicates engage in black market trading, online scam rings, casinos, drug production, and trafficking. The revenues generated from these illicit activities benefit both the military and anti-regime groups.
The economic struggles faced by Myanmar are not just a domestic concern but also a regional and global issue. The collapse of the economy has created a political problem that extends beyond the country’s borders. It is crucial for Myanmar to undergo a peaceful transition to full democratic rule to ensure the well-being of its people and restore economic stability.
In conclusion, Myanmar’s economy is in dire straits due to the military takeover, civil strife, and international sanctions. The reliance on illicit activities, loss of jobs, poverty, displacement, and deteriorating labor rights have all contributed to the economic downfall. It is imperative for the international community to support Myanmar in its journey towards a peaceful transition to democracy and provide humanitarian aid to those in need. Only then can Myanmar hope to rebuild its economy and regain its status as a rising star in Southeast Asia.