Can Myanmar’s economy rebound after the Sagaing earthquake?

Following the Sagaing earthquake of March 28, 2025—which the military council, influenced by superstition and astrology, called the “Mandalay earthquake” in defiance of the internationally accepted term—reports came out in April and May assessing the damage, losses, and economic impact. The World Bank’s “Global Rapid Post-Disaster Damage Estimation (GRADE) Report: Myanmar Earthquake – March 28, 2025” estimated that damages to homes, office buildings, and key infrastructure—including roads and bridges—amounted to around US $11 billion, equivalent to roughly 14 percent of Myanmar’s current GDP. Mandalay, Sagaing, and Bago Regions were the hardest hit. Over 17 million people were affected, and the report notes that the cost of reconstruction and repairs is expected to exceed the total value of the damage. The International Labour Organisation (ILO), the United Nations’ labour agency, reported that there are more than 3.5 million workers living in regions affected by the quake, with estimated income losses of US $36.8 million per day, potentially adding up to an annual loss of around US $9.6 billion. Myanmar’s economic crisis did not begin with the recent disaster. The country has been grappling with a deepening structural downturn since the military coup of 2021, which took place as the economy was already suffering from the Covid-19 pandemic. Intensifying civil conflict, commercial volatility, the withdrawal of foreign investment, and the junta’s conscription law exacerbated the effects even before the Sagaing Region-centred earthquake, which could serve as the final nail in the coffin for Myanmar’s already fragile economy. After more than 60,000 homes and buildings were destroyed in the earthquake, reconstruction efforts have met with obstacles and delays (Photo: EPA) The releases from both the ILO and World Bank underscored the critical shortfall of funds for meeting humanitarian needs. The junta cannot afford these costs while it is already struggling to cover deficits by printing money, further aggravating inflation. Myanmar’s gross domestic product (GDP) contracted sharply in the year of the coup, falling by 18 percent after averaging between six and seven percent from 2011 to 2020. The same year, international monitors estimated that around a million people in Myanmar were in need of humanitarian assistance, a number that rose to at least 18.6 million by 2024, according to UN estimates. The Asian Development Bank projected in April 2025 that the figure would rise to more than 20 million by the end of the year. Meanwhile, the inflation rate hit 26 percent in Myanmar in 2024. These conditions were little improved, if not worse, by the time the earthquake struck in March. Trends before the quake Economic experts have warned that Myanmar is experiencing stagflation—slow economic growth accompanied by persistently high inflation. It is simultaneously experiencing both a supply shock in the form of declining production and disrupted supply chains, and a demand shock driven by falling purchasing power and decreased consumer spending. The withdrawal of international aid—previously valued at billions of dollars annually—and a decline in foreign investment have also contributed to the stagnation. Neither problem is uncommon on its own. China, for example, has been coping with declining demand as its production of goods outpaces what its domestic market requires. The United States, by contrast, has been contending with inflation driven by strong consumer demand that domestic production has failed to meet, as well as reduced imports following the Trump administration’s introduction of tariffs. However, facing both problems at once places Myanmar’s economy in an extremely precarious state. People inside the country have responded to the falling value of the Myanmar kyat, increasingly turning to gold, real estate, or foreign currencies as alternative stores of value, further accelerating the national currency’s depreciation. Consequently, prices for essential goods such as agricultural inputs, diesel fuel, and raw materials for factories have also soared. At the same time, the closure of border gates due to armed conflict, the frequently extortionate tolls collected by both junta and anti-regime forces at checkpoints, and worsening corruption across government departments have imposed mounting costs on the public. The junta’s conscription law has also prompted an exodus of the young and able-bodied from Myanmar, driving up the cost of labour as well as goods. High prices and job shortages have caused poverty to spread throughout Myanmar (Photo: AFP) Electric energy generation in Myanmar had regressed to 2015 levels by 2024, according to a World Bank report released in that year. The World Bank attributed the decline to the withdrawal of foreign investment, especially the exit of the Hong Kong-based VPower Group, from natural gas power plant projects, as well as a scarcity of fuel and spare parts caused by sanctions. A report released earlier in the year included survey results from 500 businesses, in which 33 percent of respondents cited power outages as the primary cause for declining output, and all reported operating at 65 percent or less of their full capacity. The effects of power outages are seen in everyday life as well as business balance sheets and economic indicators. Yangon residents confirmed blackouts had increased since before 2020, and said they often resort to cooking meals or pumping water at midnight, when the lower strain on the electric grid is less likely to cause an outage. The scarcity of electricity has posed additional problems for the function of social services, education, and healthcare, and the solution would require large investments of American dollars that the military regime is currently unable to afford. International reports indicate that one in every three people in Myanmar is now suffering from food insecurity, a term that diplomatically masks the excruciating realities of hunger and malnutrition. Since the 2021 coup, falling employment has severely impacted livelihoods throughout the country, with the World Bank’s July 2022 Myanmar Economic Monitor revealing that half of all households experienced income loss in the previous year. The report also estimated that the poverty rate had climbed to 40 percent. The downturn might have been less severe if exports had remained strong despite weakened domestic demand, but exports fell from US $17 billion in 2020 to $15 billion the following year, aggravating unemployment. Mismanagement and conflict have left little opportunity for recovery since then, and the Sagaing earthquake dealt a devastating blow to an economy that was already in a fragile state. The total donations reported in junta-run newspapers fell far short of what was needed for emergency rescue and relief, let alone rebuilding and rehabilitation in the affected areas. If the regime again resorts to printing money to fund reconstruction, inflation could exceed 100 percent. With ministries and government offices in Naypyitaw now lying damaged or in ruins as the crisis wears on, the junta’s stated economic policies offer little hope of recovery in the foreseeable future. The military has restricted the use of electricity, and some manufacturers have been forced to shut down due to the inadequate power supply Regime policies If one characteristic is clear from an examination of the military council’s economic policies, it is the regime’s primary aim: to maintain power. The junta’s generals have shown little interest in addressing the country’s deepening economic crises, even if they were in a position to do so. At a time when young people are critical to rebuilding the country’s potential, their enforcement of conscription underlines this. With regime survival taking priority over the recovery of productivity, it is unsurprising that international experts have labeled the set of policies implemented by the junta a “war economy.” The regime’s tendency to resort to severe restrictions is also evident. Examples included their limitation of imports and exports, manipulation of foreign currency exchange by shifting from a floating rate to several fixed rates, and their imposition of price controls for essential goods like rice and cooking oil. Authorities routinely blame and even detain traders for rising prices, contributing to the sense of insecurity that discourages long-term investment and growth. The underlying reason for these heavy-handed restrictions is a third characteristic of the regime’s approach: a reliance on brute force that may reflect Min Aung Hlaing’s personal disposition or may simply be written into the regime’s authoritarian DNA. The military’s behavior may stem from an instinct to find scapegoats and suppress dissent in its rigid chain of command, rather than take a considered approach to evaluating risks, anticipating consequences, and solving complex social and economic problems. Consequently, lower- and mid-level officials are compelled to carry out orders they know are misguided or harmful, and are tasked with converting the junta chief’s most unrealistic ideas or promises into policy. After Min Aung Hlaing called for an emphasis on “agro-based industry” during a meeting, cabinet and regional ministers went on tours of poultry and hog farms as a performative gesture, touting and overstating ostensible advances in farming and industry. Junta officials find themselves in the absurd position of turning the leader’s offhand remarks into slogans, such as the empty promise to “double the exports” while revenues from exports decline and the junta-controlled ministries implement an import substitution policy. Power outages have increased since the 2021 coup The military regime therefore blindly pursues arbitrary development strategies bound by its leader’s opinions rather than informed by sound economic logic. For example, Myanmar has partnered with Russia in a joint steel production venture with Russia—despite insufficient electricity, poor infrastructure, and high production costs—at a time when even global steel giants like Japan and South Korea are struggling to compete with China’s steel overproduction and artificially low prices. Likewise, no country in the world has achieved development purely through agriculture. As economies grow, the share of GDP from agriculture inevitably declines, while the industrial and service sectors expand. In this light, the fact that nearly half of Myanmar’s workforce is still employed in agriculture is a discouraging indicator. Moreover, even with Myanmar’s disproportionate farming sector, studies have shown that agricultural yields have actually declined, contradicting official rhetoric. Finally, the junta generals along with a tight network of relatives and crony associates tightly control policymaking, regulatory changes, and the process for granting tenders and licences. The concentration of power and wealth ensures pervasive corruption, benefitting only a tiny elite while most of the country copes with declining opportunities, incomes, and hunger, as detailed in reports by the World Bank, Asian Development Bank, and United Nations. The endgame These dismal conditions raise an urgent question: Who will provide the amount—amounting to tens of billions of dollars—needed to cover the costs of damage from the earthquake and the country’s deficit? Can help come from Russia and China, the two powers apparently least inclined to treat the military regime as a pariah? Russia is preoccupied with its own ongoing war in Ukraine and grappling with declining revenue due to falling global oil prices. China is also unlikely to provide aid or loans in the amounts needed, despite its ongoing involvement in Myanmar’s internal affairs to bolster the regime. Countries involved in implementing China’s Belt and Road Initiative, such as Laos, have begun to struggle to repay their debts, prompting China to scale back its lending and adopt a “small is beautiful” approach. Considering the added risks from armed conflict, large-scale Chinese investment in job-creating sectors like infrastructure, factories, or workshops in war-torn Myanmar is unlikely. If recent history is any guide, any investment that occurs will likely be limited to areas controlled by northern armed groups aligned with Chinese interests and rich in natural resources. This would be in keeping with past patterns under Myanmar’s previous dictatorships, which prioritised resource extraction over development. Expansion of domestic businesses is also infeasible, with local entrepreneurs hindered by the unreliable electricity supply, and the military council has already all but exhausted the option of printing more money. Overcoming a crisis of this magnitude would be challenging even for a government with broad public support and legitimacy. With international aid, recovery could still take up to a decade under a competent administration. For an isolated pariah regime that came to power unlawfully and is not trusted by the people, the road to prosperity will be far longer and more difficult. International organisations have reported that the coup has left millions of Myanmar people impoverished (Photo: EPA)

Can Myanmar’s economy rebound after the Sagaing earthquake?

Even for a legitimate, internationally recognised government the prospects for recovery would be bleak after the quake, which dealt a heavy blow to an economy already made fragile by years of frequent power outages, plummeting productivity, and monetary mismanagement

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