The Culprit of the Economic Downturn in Myanmar

During these years, Myanmar possessed decent conditions for economic development with a moderate level of political and economic reform. A month before the 2020 Myanmar election, the World Bank predicted that the Myanmar economy would increase and recover by 5.9 percent. But, all of these opportunities were wasted by the coup attempt by military leader General Min Aung Hlaing. The World Bank forecasts that the economy of Myanmar is expected to contract by 18 percent in the 2021 fiscal year (Oct 2020–November 2021)[1]. On February 1, the Myanmar Military detained the country’s de facto leader, Aung San Su Kyi, President Win Myint and other senior politicians proclaimed it had taken control of the whole country as a reason for the unfair and ambiguous election result of the ruling NLD government in 2020 election and has declared power had been handed to General Min Aung Hlaing, the commander in chief of the Myanmar army according to the 2008 constitution. Beginning with the period of the military taking power, increasing nationwide protests after a military coup, massive participation in civil disobedience moments, boycotting the military businesses, implementation of sanctions, and illegal crackdowns on the pro-democracy protesters had huge impacts on the businesses and operation system of the Myanmar economy.

A military coup has a huge effect on its economic structure and it can decrease GDP as a result of negative effects on regulatory institutions. Fosu(1992) argued that political instabilities diminish the efficiency of the production process and have an enormously negative effect on the growth of GDP[2]. However, a new military government will set its own rules and policies that can favor the politically weighty elite including their welfare. It can have disastrous long-term economic impacts and political instabilities also weaken the economic development of a country. Furthermore, some statistical analyses also indicate that military interventions deteriorate the economic development of a country and a limited correction between the economic cycle and a military coup for Latin America[3].

Does the Civil Disobedience Movement work?

At the beginning of the anti-coup moments in Myanmar, civil disobedience moments played a major role in disrupting the governing system of the military government, and it was the most basic and effective response of citizens to widen public concern through the adverse reaction that it provoked. Since the coup, a broad range of professionals, including doctors, teachers, bankers, lawyers, engineers, civil servants, and other professional workers, have joined the CDM movement, calling for an end to military dictatorship and refusing to return their work. The profound effect of the moments has weakened the governing system, military-related businesses, and banks, and has also had negative consequences on the current businesses in Myanmar.

Four months after the coup, the banking crisis became a major challenging factor for the military government, and it also had a big impact on the country’s economic activities. The anti-coup moment resulted in the disruption of banking services, and bankers were absent from doing their jobs for nearly four months. As a result, the banks were not able to operate their procedures, and international trade has also been adversely affected. People have also boycotted the military-owned Myawaddy bank, and they tried to take out their money to avoid uncertainties and rumors of money shortage problems. Additionally, rumors spread that a banking collapse had been floating since February, and the situation was getting worse after the government shut down the internet to prevent the information flow of protests. Many people tried to withdraw their cash at the bank, and the cash shortage problem became a major problem for banks. Moreover, banks set rules to reduce withdrawals and provide daily limits for their customers. People and even the companies needed to wait in a long queue to get their required amount of cash, and it was difficult to operate financial activities. On the other hand, most of the banks and non-CDM bankers were still working to provide services for military-related businesses and their partner businesses, and it is hard to estimate the success rate of bankers’ CDM moments. As a result, it is also difficult to figure out who suffers the negative consequences of bankers’ CDM moments, the military government, or the public.

Later, to prevent the banking crises and instabilities, the government has forced the banks to operate their whole activities but it is still hard to return to the situation. In the long run, it is possible that the government will set new policies that can reveal financial difficulties and it will also be overweight for their own benefit.

Covid-19 or the final weapon to kill the country’s economy

Six months after the military coup, over 90 percent of the country was affected by the third wave of COVID-19 in Myanmar. The deficiency of effective government policy to counteract the third wave covid-19 can be considered as the key reason for spreading the virus across the country. On July 26, the Ministry of Health and Sport, now under the control of the State Administration Council (SAC) junta, reported that there were a total of 269,525 patients, 185,402 recovered patients and 71111 confirmed deaths but this was only the data of patients who went to the hospitals and there were numerous unofficial patients and deaths. As an effect of increasing oxygen shortage problems and lack the health support for COVID-19 patients, it is very difficult to control the disease. Furthermore, although the Ministry of Health and Sports announced a 14-day holiday to prevent the disease effectively, the cases are still increasing rapidly.

Consequently, most of the businesses are closed, and it is hard to run the businesses during the pandemic. The level of the unemployment rate is increasing and Word Bank reported that around 1 million jobs could be lost [4].Most of them are working in informal sectors such as construction, garment factories, and SME businesses. Other businesses such as travel and tours companies and online related industries were facing obstacles since the February coup. Therefore, it can be considered that the whole economy was deteriorated not only by the coup but also by the harmful results of covid-19.As the impacts of pre-existing poverty, the covid-19 pandemic, and the current political instability in Myanmar, the World Food Program (WFP) estimates up to 3.5 million people will be hungry and mostly those in urban areas[5]. The report of UNDP also estimates that the negative effects of Covid-19 and the ongoing coup d’état could push up to 12 million people into poverty and 25million people of the total population could be below the national poverty line by early 2022[6].

General Min Aung Hlaing or the culprit of the problems

In fact, Myanmar had a decent condition in the economic and political reform process before the coup although the previous NLD government had some weaknesses. After the military coup, Myanmar was returned to the way of authoritarian rule. The military has interrupted the economic activities of the country and it can also decrease economic freedom. So, it is inevitable that the military government will not decrease its power and authority in the transition process of the market economy.

In the long them, there is a need to provide effective policies and plans that can improve the country’s economic development and political reform process as well. If not, the overall status of the country will decrease rapidly. Additionally, political stability also plays a crucial role in the implementation of the economic reform process. Thus, ending the military dictatorship might be the ultimate solution to end all of the difficulties and to form a federal country with rapid economic development.

[1] The Myanmar Economic Monitor (MEM), progress threatened; resilience tested July 2021 by World Bank Group.

https://pubdocs.worldbank.org/en/525471627057268984/pdf/Myanmar-Economic-Monitor-July-2021.pdf

[2] Fosu, A. K. (1992). Political Instability and Economic Growth:Evidence from Sub-Saharan Africa. Economic Development and Cultural Change, 829–841.

[3] Welch, C. E. (2008). Long term consequences of military rule:Breakdown and extrication. Journal of Strategic Studies.

[4] The Myanmar Economic Monitor (MEM), progress threatened; resilience tested July 2021 by World Bank Group.

https://pubdocs.worldbank.org/en/525471627057268984/pdf/Myanmar-Economic-Monitor-July-2021.pdf

[5] WFP to step up operations in response to fast rising hunger in Myanmar, 22 April 2021, World Food Program.

https://www.wfp.org/news/wfp- step-operations-response-fast-rising-hunger-myanmar,

[6] Covid-19 Coup D’etat and Poverty, compounding negative shocks and their impact on human development in Myanmar, April 2021, United Nations Development Program (UNDP)