Myanmar economy remains fragile despite signs of stabilization, says World Bank

Real GDP is estimated to have contracted by 2 percent during the 2025/26 fiscal year, reflecting the continuing impact of weak demand, power constraints, and limited room for policy intervention.

Myanmar's economy showed modest signs of stabilization before fresh global pressures emerged in 2026, though growth remains weak and recovery prospects continue to be weighed down by conflict, inflation, and structural challenges, according to the latest Myanmar Economic Monitor released by the World Bank.

The report says economic activity improved slightly during late 2025 and early 2026 following partial recovery from the March 2025 earthquake, some easing of electricity shortages, and resilience in parts of the manufacturing, construction, and services sectors. Even with these improvements, businesses continued to operate far below levels seen before 2021 and before the earthquake.

Real GDP is estimated to have contracted by 2 percent during the 2025/26 fiscal year, reflecting the continuing impact of weak demand, power constraints, and limited room for policy intervention.

Fuel price shock adds pressure to struggling economy

The situation became more difficult after tensions in the Middle East triggered a fuel price shock in early 2026. Rising fuel costs increased transportation and logistics expenses, pushed up production costs for businesses, and intensified demand for foreign currency needed to finance fuel imports. Inflation, which had eased during the latter part of 2025, began accelerating again from March 2026. By April, consumer prices were rising at an annual rate of 24.6 percent, adding further strain to household budgets.

Higher living costs have had a particularly severe impact on vulnerable families already facing economic hardship, reducing purchasing power and limiting access to essential goods and services. World Bank officials noted that while some indicators suggest conditions have become more stable compared with earlier periods, the economy remains highly vulnerable to both domestic and external shocks.

Growth outlook downgraded as risks persist

The World Bank now expects Myanmar's economy to grow by 2 percent in the 2026/27 fiscal year, lower than the 3 percent forecast issued before the fuel shock. Several risks continue to cloud the outlook, including ongoing conflict, disruptions to trade routes and logistics networks, weaker export earnings, and continued volatility in global energy markets.

The report warns that without meaningful improvements in the broader operating environment, economic recovery is likely to remain slow and fragile.

Businesses focus on survival rather than expansion

The monitor also highlights the difficult conditions facing Myanmar's private sector. Companies are dealing with rising operating costs, administrative challenges, and inconsistent implementation of regulations and policies. Many businesses have shifted their focus from expansion and investment to basic survival, limiting their ability to create jobs or raise incomes. This trend is weakening prospects for broader economic recovery and reducing opportunities for workers and households.

According to the World Bank, improving predictability in regulations and strengthening coordination across institutions could help restore business confidence and support future growth. Officials say addressing implementation challenges and improving service delivery will be critical if Myanmar is to create conditions that encourage investment, strengthen private sector activity, and build a more sustainable economic recovery.