Myanmar’s economy is set to shrink by 2 percent this financial year, due to the effects of intensifying conflict and economic mismanagement by the military junta, according to the latest Myanmar economic outlook from the research group BMI.
BMI, a unit of Fitch Solutions, cited the World Bank’s recent projection that the country’s economy will shrink by 1 percent in the fiscal year ending March 2025, but said that even such a dire prediction “might be too optimistic.”
As an explanation, it cited the impacts of ongoing conflict, natural disasters, rapid currency depreciation, high inflation, and outward migration, which have combined to devastate the formal economy.
“We maintain our forecast for the economy to contract by 2.5% this fiscal year before stagnating in FY2026, leaving the economy 20.0% smaller than in FY2020,” BMI stated. It later added, “with domestic conflict showing no signs of easing, the outlook remains bleak.”
According to the United Nations Office for the Coordination of Humanitarian Affairs’ most recent humanitarian update, released in January, the total number of internally displaced persons (IDP) had reached over 3.5 million at the end of 2024, equivalent to around 6 percent of the population. At the same time, “humanitarian needs are increasing to unprecedented levels in Myanmar, with an estimated 19.9 million people in need of assistance in 2025.”
BMI emphasized the impact of natural disasters, particularly Typhoon Yagi, which hit the country in September, resulting in the loss of “hundreds of thousands of hectares of crops” across nine states and regions. It said that inflation will persist, due to “severe food shortages,” particularly in regions that are experiencing the most active conflict, including Rakhine State, where the ongoing fight between the Myanmar armed forces and the Arakan Army has led to shortages of fertilizer and trade disruptions. BMI cited a recent U.N. report that food production in Rakhine is “expected to meet only 20.0% of local needs by mid-2025.”
The BMI outlook makes clear that the junta’s policies have only worsened the situation. In particular, the military’s forced conscription drive, first announced in February 2024, has led thousands of potential conscripts to flee the country, straining further the country’s “rapidly depleting workforce.” According to the AFP news agency, “more than a million people have fled Myanmar’s brutal civil war to seek shelter and work in neighboring Thailand.”
The exodus “will not only lead to a sharp decline in productivity across key sectors but also cast a long shadow over the market’s prospects even if the civil war inevitably ends,” BMI stated.
It also said that the junta’s price caps on daily necessities such as eggs, fish, meat, and cooking oil could have “unintended consequences,” pushing these goods into informal markets where they would be sold at inflated prices, “further intensifying inflationary pressures.”
All told, the BMI report, like the World Bank’s most recent economic outlook, shows few ways that Myanmar can pull out of its current economic death spiral. As long as the military remains intact, and the resistance to its rule persists, the country’s economy will continue to atrophy, with impacts that could set the country back by a generation.
