Military coup yet another blow for Myanmar’s sagging economy

BANGKOK (AP): The military coup in Myanmar is unlikely to do the country’s struggling economy, once considered a promising “last frontier,” any good at all.

Myanmar’s economy has languished as the pandemic added to its challenges and the prospect of fresh Western sanctions in the wake of this week’s army takeover will only make things tougher for those on the ground, economists say.

It’s unclear if China might help make up for lost business due to the increased political risks and potential for turmoil if public anger over the ouster of massively popular Aung San Suu Kyi and fellow civilian leaders erupts in mass protests.

Apart from raising the risk of political unrest, economic sanctions and other disruptions, the coup likely will prove to be a huge setback to efforts to improve Myanmar’s investment environment, curb crony capitalism and build a more sustainable path to growth.

“With this kind of situation the sad thing is that you don’t even need to put sanctions in place because the dire economic consequences of the conflict, combined with what happening now makes the country look very unstable and not the right place to invest right now. So the repercussions are immediate,” said Laetitia van den Assum, a former diplomat and a member of the Advisory Commission on Rakhine State, which was set up by former U.N. Secretary General Kofi An-nam to improve Myan-mar’s treatment of minority Rohingya Muslims.

The military seized power shortly before a new session of Parliament was to convene on Monday, declaring its actions were legal and constitutional because Suu Kyi’s government had refused to address voting irregularities in November’s election, which her National League for Democracy won in a landslide.

That provoked a rush to ATMs and food stalls. TV signals were cut and passenger flights were grounded. Authorities urged calm, while moving to suppress dissent through Facebook and other social media.

Commander-in-Chief Senior Gen. Min Aung Hlaing, who now controls the government, met with business leaders and pledged to maintain financial stability and “continue work on international projects.” Meanwhile, the central bank promised it would not demonetize any of the currency, a reasonable fear: three past demonetizations provoked much anguish and anger.

“The general public can continue using the banknotes and banking services without any worries, and all the banks have been instructed to provide regular banking services,” the Central Bank of Myanmar said in a notice. The economy already was faltering before the pandemic. Sian Fenner of Oxford Economics estimates the coup will likely cut growth this year by half, from an earlier forecast of 4.1% to 2%.