The southeast Asian nation of Myanmar, which saw military junta snatching power from a democratically-elected government through a coup on February 1 this year, is heading towards an economic crisis. Reports indicate that people are forming large queues to withdraw money from their bank accounts due to trust deficit with the current military rulers.

Kyat, the Myanmarese currency, has fell by over 45 percent from around USD 1,300 to the at the beginning of this year to nearly 1,800 today. The record depreciation in kyat is attributed to the collapse of confidence in the system.

 

In March this year, the European Union had stopped its budgetary support for development projects in Myanmar. EU ministers are considering suspension of its ‘Everything But Arms’ (EBA) scheme to Myanmar, which grants duty-free, quota-free access to the EU market of 450 million consumers.

 

A notable beneficiary of EBA is the garment industry, which provides employment to more than 0.5 million, most of them women, and accounts for one-third of Myanmar’s total exports. The country’s total apparel exports fell 11.75 percent to USD 4,621.31 million in 2020 from USD 5,236.58 million in 2019 due to the COVID-19 pandemic, according to data. But after the military takeover, several global retail brands like Bestseller have stopped sourcing from the country, resulting in a big blow to jobs, exports, and the economy.

 

In short, the continuing uncertainty over political stability is taking the toll on Myanmarese economy. It is reflected in lack of public and investor confidence, the cash shortage, and the depreciating kyat against the U.S. dollar.

 

Source: fibre2fashion.com