Yangon (AFP) – Myanmar’s economy is set to shrink 2.5 percent in the 2025/26 financial year, largely as a result of March’s devastating magnitude-7.7 earthquake, the World Bank said on Thursday. The country’s economy had already been battered by four years of brutal civil war when the March 28 tremor hit, killing nearly 3,800 people and destroying swathes of homes and businesses.
A World Bank report predicted GDP will contract 2.5 percent in the financial year ending in March 2026 “mostly due to earthquake impacts,” with output $2 billion lower than it would have been without the disaster. “Production across all sectors has been disrupted by factory closures, supply chain constraints, labour shortages, and damage to infrastructure,” said a World Bank statement. The tremor also inflicted an estimated $11 billion of damage, equivalent to 14 percent of GDP, according to the report.
Myanmar’s sparsely populated administrative capital Naypyidaw and the second-largest city of Mandalay were the worst impacted by the quake. The World Bank predicted both regions would suffer from output slashed by a third between April and September, before being buoyed by reconstruction efforts in the second half of the financial year. “The earthquake caused significant loss of life and displacement, while exacerbating already difficult economic conditions, further testing the resilience of Myanmar’s people,” said Melinda Good, World Bank division director for Thailand and Myanmar.
Myanmar’s military seized power in a 2021 coup which sparked a many-sided civil war between its troops, pro-democracy guerillas, and ethnic armed groups which have long held sway in the country’s fringes. While the military and some of its adversaries have pledged a ceasefire throughout this month to spur aid efforts, intense combat has continued in locations across the country. The fighting has eviscerated Myanmar’s economy.
Inflation for the year up to April 2025 was estimated at 34.1 percent, the World Bank report said. More than three million people are currently displaced in the country, and the World Bank said 2024’s poverty rate was estimated at over 30 percent.
© 2024 AFP
