Economic growth remains constrained due to weak domestic demand, labor shortages, and frequent power outages
YANGON, December 8, 2025 - Myanmar's path to economic recovery sees moderate signs of improvement despite significant headwinds, as the country grapples with the ongoing impacts of the March 2025 earthquake, persistent conflict, and enduring structural challenges, according to the latest World Bank Myanmar Economic Monitor released today.
The report finds that firms operated at higher capacity in October 2025 compared to April and the kyat has appreciated steadily throughout 2025 following a sharp depreciation last year. While inflation has eased, overall prices remain high, continuing to strain household budgets. Freight transport volumes increased over the six months to September 2025, reflecting a partial easing of earthquake-related supply disruptions.
"These early signs of recovery are encouraging," said Melinda Good, World Bank Division Director for Thailand and Myanmar. "However, Myanmar's economy continues to face formidable obstacles, including constrained reconstruction financing, ongoing conflict and insecurity, and unreliable electricity supply."
The report projects that real GDP will contract by 2.0 percent in the fiscal year ending March 2026-an upward revision from the previous estimate of -2.5 percent. Looking ahead, a moderate rebound of 3 percent is forecast for FY2026/27, driven primarily by post-earthquake reconstruction and continued targeted assistance for those most affected. Inflation is expected to remain above 20 percent in the near term, maintaining pressure on living costs. Fiscal challenges will persist, with the deficit projected to reach 5 percent of GDP in FY2026/27, due to increased reconstruction spending. Public debt is anticipated to remain above 60 percent of GDP, reflecting higher domestic borrowing.
The report also underscores the resilience of Myanmar's agrifood sector, which remains a key driver of private sector activity and job creation despite frequent shocks-including regular flooding and the recent earthquake. The agrifood industry contributes 27 percent of gross value-added and represents 22 percent of employment within the manufacturing sector.
"Strengthening agrifood value chains is important for resilience and jobs," says Kemoh Mansaray, World Bank Senior Economist. "International experience suggests that improving the enabling environment and investing in agricultural infrastructure can help."
Targeted interventions in agrifood sector include strengthening producer-processor linkages, upgrading storage and logistics infrastructure, and facilitating access to modern processing technologies.
