Myanmar recovery dented by devastating quake, World Bank says

Business Times

2 days ago

[NAYPYIDAW] Myanmar's economy is headed for its worst performance since the pandemic as the strife-torn country reels from the impact of a devastating earthquake in March that's estimated to have caused US$11 billion in damage, according to the World Bank.
The 7.7 magnitude earthquake on Mar 28 affected more than 17 million people and wrecked widespread damages to residential buildings, public infrastructure and heritage sites in areas accounting for about one-third of Myanmar's gross domestic product. The impact of the quake still continues to disrupt lives and livelihood, 'exacerbating the already very difficult conditions in the affected areas,' the bank said in a report Thursday.
The dent to economic output due to the earthquake will be equivalent to about 4 per cent of Myanmar's GDP in the fiscal year ending March 2026, the development bank estimated. The economy will contract 2.5 per cent in 2025-2026 before rebounding to a growth of 3 per cent the following year due to rebuilding efforts and the low base, it said.
Prior to the earthquake, which left 3,800 people dead and 207,000 people displaced in townships including Mandalay and Naypyidaw, the World Bank had forecast a 2 per cent expansion this year. The worst-affected regions are expected to lose about a third of their production between April and September, it said.
'The economic aftershocks of the earthquake have struck on the back of ongoing challenges from conflict,' the World Bank said.
The nation has been struggling with a civil war, stinging inflation and a shortage of US dollars since the military seized power in 2021 February. A raging conflict between rebel groups fighting for independence and the regime has displaced about 3.5 million people, the lender said, citing United Nations estimates.
Inflation, which quickened to 34.1 per cent in the year to April, may remain high at around 31 per cent in the current fiscal year due to supply-chain disruptions associated with the quake and conflict-related logistics challenges. The poverty rate may climb 2.8 percentage points from an already high ratio of 31 per cent last year, according to the World Bank.
Myanmar's budget deficit is seen widening to 6.9 per cent by the end of March next year, up from 5.1 per cent a year earlier with much of the deficit funding coming from the central bank, the report said.
'The earthquake caused significant loss of life and displacement, while exacerbating already difficult economic conditions, further testing the resilience of Myanmar's people' Melinda Good, World Bank Division Director for Thailand and Myanmar said in a statement. 'Recovery efforts are essential to help the most vulnerable populations.' BLOOMBERG