Summary of the Myanmar Economic Monitor (June 2024)

Myanmar's economy faces significant challenges in 2024, constrained by elevated conflict, increased macroeconomic volatility, and a difficult business environment. Key points include:

- Conflict and Displacement: Ongoing conflict continues to disrupt household livelihoods and agricultural production. It has significantly affected land border trade with China and Thailand and domestic supply chains. As of early June 2024, conflict has displaced more than one million people since October 2023, bringing the total number of internally displaced persons (IDPs) to 3.1 million.

- Macroeconomic Environment: The economy is suffering from kyat depreciation, foreign currency shortages, and import license issues, leading to persistent inflation and shortages of essential imported inputs. Electricity outages have worsened, increasing production costs as firms rely on expensive diesel generators.

- Economic Activity: Recent indicators of economic activity are subdued. GDP growth was only 1 percent for the year ending March 2024, leaving it 10 percent below pre-pandemic levels. Firms reported operating at 65 percent of their capacity, an improvement from September 2023 but still below previous levels. The services sector, especially retail and tourism, has been heavily impacted by high inflation and reduced consumer spending power. Manufacturing and agricultural sectors show mixed signs, with some resilience in agriculture due to improved input use and crop yields, but overall production is hindered by limited access to credit and conflict-related disruptions.

- Labor Market: The labor market remains weak, with only partial improvement since 2022. The employment rate rose by 2.3 percentage points over the past year but remains 7.4 percentage points below 2017 levels. The unemployment rate increased from 6.7 percent to 8.1 percent.

Agriculture, Food, and Food Insecurity:

- Agricultural Sector: The agricultural sector has shown resilience, particularly in rice and crop yields due to increased input use. However, conflict and limited access to credit continue to disrupt farming activities.

- Food Prices and Inflation: Rising food prices have driven persistent inflation. The Consumer Price Index (CPI) for food has increased significantly, reflecting the broader economic challenges.

- Food Insecurity: Patterns of food insecurity are linked to regional disparities and ongoing conflict. Food prices have risen sharply across different regions, exacerbating the vulnerability of households to food insecurity.

Outlook and Risks:

- The economic outlook remains uncertain, with ongoing conflict and macroeconomic instability posing significant risks. Growth projections are modest, reflecting the challenging environment.

-  Inflation is expected to remain high, driven by persistent price pressures in food and fuel.

- Trade weaknesses and exchange rate depreciation pressures are likely to continue, affecting overall economic stability.

The report highlights the urgent need for policy measures to address these challenges and support economic recovery, particularly in the agricultural sector and areas affected by food insecurity.

Disclaimer: This summary has been prepared by an artificial intelligence (AI) language model. Readers are encouraged to refer to the full report for a complete understanding.