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‘Riding a rollercoaster’ in Myanmar’s post-coup economy



Bangkok/Yangon – For Aung Thet, a successful entrepreneur in Yangon, running a business under Myanmar’s military regime feels like “riding a rollercoaster”.

The Southeast Asian country’s economy has been brought to its knees by the conflict triggered by the military’s power grab two years ago.

Foreign investors have headed for the exits and the generals have forced companies like Aung Thet’s to convert their foreign exchange accounts into Myanmar kyat. Criticism of the military administration is not tolerated.

“It’s a very hostile environment for businesspeople and the risks for speaking out on policy issues are high,” Aung Thet, who asked to speak under a pseudonym, told Al Jazeera. “Even the national business lobby doesn’t have much clout over the junta’s economic policies. They could be brutal to businesspeople who voiced their criticisms.”


In some ways, Aung Thet is relatively fortunate. His company is in the agricultural export sector and is not existentially threatened as long as farmers continue to produce the crops he sells in countries – including in Africa and Europe.

Since toppling Aung San Suu Kyi’s democratically-elected government on February 1, 2021, the military has cracked down on the civilian population opposing the coup and filled the country’s prisons with people critical of its rule.

But opposition to the military – led by the National Unity Government (NUG) established by the elected politicians the military overthrew – remains strong and the generals have been unable to secure full control of the majority Bamar heartland. Meanwhile, ethnic armed groups – some aligned with the resistance – have consolidated their rule over swathes of the country.

A busy street in Yangon showing cars filling the streets in each direction. The golden stupa of the Sule Pagoda is behind
While the streets of Yangon remain busy, the climate for business since the coup has worsened [AFP]

A huge civil disobedience movement and consumer boycott have also undermined the military’s hold over the government apparatus and hurt military-owned companies with well-known brands.

Under Senior General Min Aung Hlaing, Myanmar has also faced its worst-ever power cuts and joined Iran and North Korea on global watchdog Financial Action Task Force’s financial terrorism blacklist.

Economically, Myanmar has experienced considerable banking and currency volatility as well as an exodus of big foreign names including Norway’s Telenor, Alibaba of China, French giant Total and Ooredoo of Qatar.

Gross domestic product (GDP) shrunk by almost a fifth in 2021 before growing by just 3 percent from a much smaller base the following year.

The World Bank this week put Myanmar’s growth for the fiscal year ending in September at 3 percent but warned that per capita GDP would remain about 13 percent below its level before the COVID-19 pandemic. That means Myanmar’s 2023 GDP will still be smaller than the pre-coup economy.

Recovery from the shocks of COVID-19 and the coup “is expected to remain subdued in the near term, constrained by significant macroeconomic and regulatory uncertainty, persistent conflict, and ongoing electricity outages,” the World Bank said in its update.

Myanmar’s poverty rate has also more than doubled compared with pre-COVID levels, according to the International Labour Organization. Household income has further reduced and food insecurity has worsened.

Rising prices

The undoing of a decade of economic progress, combined with the military government’s failure to quell the resistance, poses a threat to Min Aung Hlaing’s ability to deliver on strategic projects for China and other supporters. They also put at risk the general’s plan for elections later this year, which are widely seen as a way for the military to cement its hold on politics through its proxy, the Union Solidarity and Development Party.

The military regime has detained some of Myanmar’s tycoons and confiscated the passports of foreign corporate executives. The jailing last year of prominent foreign business advocate Vicky Bowman, a former United Kingdom ambassador to Myanmar, and her husband, in particular, have raised concern among international investors.

In April, the administration ordered banks and other holders of foreign currency to convert all deposits into the local currency, kyat, giving foreign currency holders one day to exchange their holdings at licensed banks. Business groups and diplomats, including the Chinese ambassador, complained about the policy.

A bowl of mohinga soup, a popular breakfast for people in Myanmar. The dish contains noodles and fish. There is a slice of lime on the side and green herbs scattered on top.
Rising prices are affecting people across Myanmar, with mohinga, a traditional breakfast rice-noodle dish with fish soup, now costing more than double what it did at the time of the coup [File: Ann Wang/Reuters]

The move made it impossible to buy United States dollars to settle payments for suppliers. Businesses have had to depend on informal remittances, such as convincing suppliers to accept IOUs. The alternative is to go through middlemen, which involves a fee of as much as 5 percent.

“Let me be absolutely frank. The generals did the fixing of USD in April and it’s a bad move,” Aung Thet said. “Since 2022, the policies are volatile on imports, even for essential items. One day they said this was their top priority and the next day they came out with a different take. It’s extremely volatile and difficult. It forces us to consider scaling down our businesses in order to survive.”

While Aung Thet’s company laid off 5 percent of workers after the coup, he has been able to keep the rest – a few hundred people – on the payroll without having to cut their income. Revenues, in millions of dollars before the coup, have stabilised since late last year.

“Farmers have to do what they can do,” he said. “If they missed a month of growing crops, they would struggle massively to stay afloat, especially smaller farmers.”

But in regions where there is active fighting, such as Sagaing and Kayah states, farmers have suffered heavy losses, Aung Thet said.

“Kayah’s agriculture industry has been decimated while Sagaing – another hotspot between the resistance and the regime – has lost around 30 percent of its crop. But others have soldiered on because farmers need to grow crops to survive,” he said.

While the depreciation of the kyat has made farmers’ exports more competitive overseas, rising prices, driven by soaring petrol costs, have eaten into their profits.

In Yangon’s tea shops, the cost of Mohinga, a traditional breakfast of rice noodles and fish soup, has more than doubled since the coup.

Farmers are also struggling to access credit as micro-finance institutions and banks have cut back on lending.

“Marginalised and smaller, poorer farmers can’t afford to buy fertilisers, because their prices have tripled,” Aung Thet said. “This is extremely difficult.”

The military administration has downplayed the economic difficulties since the coup.

“If everybody strives for boosting the state’s economy with momentum, Myanmar will reach the middle class of economies among ASEAN countries in a short time,” Min Aung Hlaing said last month during a meeting with military officers and families in western Rakhine state.

The army chief has claimed that the economy declined under Aung San Suu Kyi’s government and that the military had led its revival.

GDP grew by a solid 2.4 percent during the first half of the 2021-22 fiscal year and by 3.4 percent in the second half, he told fellow officials at a meeting in Naypyidaw on January 6, the numbers far higher than those given by the World Bank.

The NUG dismisses Min Aung Hlaing’s rosy prognosis.

The generals have “driven the economy off the cliff by terrorising the workforce, destroying labour rights and imposing disastrous policies such as forex restrictions,” Dr Sasa, an NUG cabinet minister, told Al Jazeera.

He said the minimum wage had not increased even as prices had risen and noted that the illicit economy had expanded. This was in reference to a United Nations Office on Drugs and Crime report last week that showed Myanmar’s opium production was at a nine-year high.

“The generals severely damaged business confidence and pushed half of the population under the poverty line,” Sasa said.

The minimum wage remains at 4,800 Myanmar kyat [$2.30] a day – a level set in 2018.

Min Aung Hlaing has also pushed for “domestic manufacturing” and called for less reliance on imports and foreign aid.

Shadows of Than Shwe

The general’s economic plans – which include proposals to build a metro system in the capital Naypyidaw and turn Myanmar into a hub for electric car manufacturing despite repeated blackouts – have drawn comparisons with former strongman Than Shwe, whose focus on infrastructure included the development of Naypyidaw, which was built in secret, and the construction of the controversial Myitsone dam.

Myanmar approved $1.45bn in foreign direct investment during the first seven months of the 2022-23 fiscal year, most of it from Singapore, a conduit for foreign money into Myanmar and China, according to official data. The military administration has stopped disclosing the projects it has approved since the coup, scrapping or restricting access to a number of corporate registries.

Chinese energy companies are among the few foreign firms that appear willing to make new investments in the country, participating in the administration’s plan to expand solar power.

Still, given the scale of the problems afflicting the industry, experts say the project is unlikely to address the root cause of the country’s chronic blackouts, which include the collapse of stable governance, conflict and currency volatility.

“Myanmar’s energy system is in shambles and there’s no plan to fix it. Not today, not in five years,” Guillaume de Langre, an energy expert who used to advise the Myanmar government, told Al Jazeera. “The junta is lying to investors, while local resistance forces are ramping up sophisticated attacks on critical points of the power grid.”

A state of emergency imposed after the coup was extended again on Wednesday, by six months, suggesting the election the military had said would be held by August might be delayed.

A woman crosses a near-empty street in Yangon. She is carrying an umbrella to protect herself from the sun
The streets of Yangon, Myanmar’s biggest city and commercial capital, were almost deserted on Wednesday as people took part in a ‘silent strike’ to show their opposition to the coup [AFP]

Even if the polls do go ahead, they are unlikely to do much to reassure investors.

“The ‘elections’ are not poised to inspire any noticeable investor confidence in Myanmar, at least for the immediate term,” said a source in Yangon who has access to the military and declined to be named for fear of reprisals. He expects business processing times will remain slower now that the state of emergency has been prolonged.

“[The] crackdown in the post-election period will intensify in a bid to paint the resistance as the obstacle from returning to ‘business as usual’.”

But unlike multinationals, Myanmar’s businesspeople, shopkeepers and farmers have nowhere to go.

“Livelihoods matter,” Aung Thet said. “Right now Myanmar is in the worst-ever state I’ve seen in my life: Broken economy, broken society, broken everything. But you would be surprised to learn that I have faith in the country’s future. I am worried yet determined to plough on.”


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As economy faces potential recession, Liberals to release 'tricky' budget Tuesday – Financial Post



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OTTAWA — The federal Liberals are set to unveil a budget on Tuesday intended to showcase their plans to keep Canada competitive amid the clean energy transition while supporting Canadians who are struggling with affordability.

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Finance Minister Chrystia Freeland has promised to accomplish as much over the last few weeks, while also pledging to keep the budget fiscally restrained.

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But that balancing act isn’t expected to be easy. A slowing Canadian economy could weigh on government coffers.

“It’s going to be very tricky for the federal government,” said Randall Bartlett, a senior director of Canadian economics at Desjardins.

The Liberals are expected to invest considerably in Canada’s clean energy transition, in an attempt to keep Canada competitive with the United States as it launches its own aggressive measures.

The Inflation Reduction Act, signed into law last August by U.S. President Joe Biden, invests nearly US$400 billion in everything from critical minerals to battery manufacturing, electric vehicles and clean electricity, including hydrogen.

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Ottawa has also promised big bucks for health care. It recently signed 10-year funding agreements with provinces on health-care transfers, and that spending is expected to be accounted for in the budget.

And with the cost of living still a top economic issue for many Canadians, the Liberals have signalled the budget will include new affordability measures.

“In the weeks to come, for those Canadians who feel the bite of rising prices the most acutely, for our most vulnerable friends and neighbours, our government will deliver additional, targeted inflation relief,” Freeland said in Oshawa, Ont. on Monday.

But Bartlett said the federal government has to balance its big-ticket spending priorities with an uncertain economic outlook.

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Many economists are forecasting that Canada could enter a recession this year as high interest rates weigh on the economy. Since March 2022, the Bank of Canada has aggressively raised interest rates to crack down on high inflation.

As global price pressures ease and interest rates dampen spending in the economy, inflation has been slowing. Canada’s annual inflation rate has tumbled from 8.1 per cent in the summer to 5.2 per cent in February.

Even as inflation becomes less of a problem, though, a slowing economy means less government revenues to finance spending.

According to a report from Desjardins, new spending measures alone wouldn’t necessarily put federal finances on an unsustainable path. But if significant new spending is paired with a worse-than-expected economic downturn, that could spell trouble for the federal government, the report says.

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“Planning for an optimistic future and spending accordingly now could lead to very challenging circumstances going forward,” Bartlett said.

The federal government also runs the risk of fuelling inflation with excessive spending, making the Bank of Canada’s job of cooling inflation more challenging. Freeland has repeatedly said she doesn’t plan on doing that, noting the federal government can’t compensate all Canadians for the rise in prices.

Bartlett said the federal government so far has done a good job balancing the need to help low-income Canadians while avoiding adding fuel to the fire.

“My concern is this that (if) they continue to layer this on top of additional spending for other other initiatives … it’s not only going to make potentially the Bank of Canada’s job more challenging, but it’s also going to just increase the size of the deficit at a time when the economic outlook is very uncertain,” he said.

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There is some ambiguity around how the government will approach tax policy in this year’s budget.

Some policy experts have suggested that increasing tax revenues might be part of the solution when it comes to stabilizing federal finances. A shadow budget put together for the C.D. Howe Institute, an economic thinktank, recommended increasing the GST tax rate.

But Bartlett said raising taxes might be a tough sell for Canadians, especially because the federal government has had mixed results on some of its key areas of investment, such as its national housing strategy.

“If we continue to see increased spending, and that requires tax increases to to afford that spending, there’s going to be … increased scrutiny by the public on whether or not we’re getting the bang for the buck,” Bartlett said.

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On the political front, the Liberals also have to contend with New Democrat priorities as outlined in the party’s supply-and-confidence agreement with the Liberals. It agreed to support the minority government in key votes until 2025 — including on federal budgets — in exchange for movement on shared priorities.

In the upcoming budget, NDP Leader Jagmeet Singh has said he wants to see the government extend the six-month boost to the GST rebate, introduced last fall, which temporarily doubled the amount people received.

Singh has also said he’d like to see federal funding for school lunches.

Per the parties’ agreement, the Liberals have already agreed to create a federally funded and administered dental care program this year that would replace the dental benefit for children in low-income families that was rolled out in the fall.

The deal also commits the Liberals to passing legislation on a national pharmacare program by the end of 2023 — although there’s been no sign of movement on that yet.

This report by The Canadian Press was first published March 26, 2023.


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Property Sector Biggest Overhang for China Economy: Hong – Bloomberg



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Property Sector Biggest Overhang for China Economy: Hong  Bloomberg


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Prices are High: Yet Inflation has dropped to 5.2%



The Inflation rate remains relatively high at 5.2% but it has declined reasonably since the interest rates began to rock and roll upwards.

Will the decision be made to raise rates further or drop them? I believe the rates will stay where they are or go up a further point. America will be increasing its rates in an effort to quell its own inflation, and our government will follow suit as usual. A Federal election may well be announced once the inflation rate in Canada has halved itself. Interest rates will be allowed to decline and the public will show their support for the Liberals in kind.

More importantly, why are prices still extremely high while inflation continues to drop? Greed and Shrinkflation of course. Any manufacturer knows the marketplace in Canada and the US has rebounded since mid-summer 2022. Supply chain problems aside, the decline of needed products that once were earmarked for North American Markets have been redirected to China and Indian needs. This is deliberate of course, allowing those manufacturers in Asian Markets to demand higher prices. Products within the retail sector have gone up in price or the price remains the same while the product has been reduced in size. After 2020-2021, most retailers did increase their prices and realized that our markets still were prepared to purchase what was needed, so they will retain their higher prices until forced to change their pricing structure in the near future.

Has this increase in slowing the economy work? North America’s Economy has been booming since mid-summer 2022. Growth rates in the US show promise, and Canada’s Economy has benefited from the boom to the south. America’s President Biden continues to sell its America First purchasing policy putting Canada’s Liberal Government into a fear fest spin. Trump’s “make America great again has been followed by Biden’s purchase American 1st”. Federal Agencies must purchase American manufactured products and services 1st, before giving foreign firms a chance to bid. Canada’s begun to apply taxes on various products in an effort to pay down their massive public debt. Beer and most forms of booze and other items that fall into the luxury tax sector are being targeted.


Have you noticed that most media outlets have refused to offer an attitude of clarity with regard to higher prices and inflation? Why are prices so high? Most so-called specialists claim various reasons why, while others insist grocers are not making loads of money, surviving on a 2-4% profit margin.
Would it not be nice to see a media broadcaster or journalist come out with something like this…

“The Public is being taken for a ride by basically everyone within the retail-manufacturing sectors”
“It’s greed baby, with a side of massive profiteering”.

Canadian and US Corporations are taking our funds to the bank, and we are letting them do so. The public continues to buy what they want on credit while complaining all the more. And did our government demand that essential items needed by the public be made locally, and not imported from some distant land? Words with no follow-up, propaganda with no real power behind them. Instead of going after the wayward profiteering firms, our governments are canceling funding programs for the businesses most damaged by the pandemic(restaurants and Mom & Pop Stores) and also pursuing some individuals that asked for CERB. Governments are and will continue to create new taxes and tax us, while they let the wealthy hide their fortunes in banking centers throughout the world. The government is so comfortable that it will pursue a policy of taxation that strikes at the most vulnerable, our elderly, who also have within their bank accounts @ 3.2 trillion Canadian and much more in America. The average Canadian Boomer is worth @$206,000 and the government and many corporations want some of that.

Like Premier Ford said last year…Ontario is back in business. So to the taxation hikes to come.

Why do our governments allow corporations to blind us with advertising propaganda while their hands are in our pockets, robbing us blind? The very basics of foodstuff, energy demands, and housing needs are pushing many towards a credit crisis never seen before. If the public fails, so do their public governments.

Steven Kaszab
Bradford, Ontario

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