“As young people of conscription age leave the nation, the local desire for dollars pulls down the value of kyat. Over the course of the last year, there has been a more than fifty percent increase in the cost of food.”
In Image: A Retail Shop by the Lake selling foods and ornaments
State media has covered increased pricing. However, the figures were calculated using wholesale prices, resulting in a greater impact on consumers.
The prolonged political turmoil and military rule in Myanmar have had a substantial influence on the country’s economy, especially on the kyat, the country’s currency, and the standard of living for its people. The economy is in progressively bad shape as a result of the sharp devaluation of the kyat and rising inflation rates. This blog examines the economic difficulties that Myanmar is now facing, including the depreciation of its currency, the increase in inflation, and the wider effects on the day-to-day lives of its citizens.
The Kyat’s Decline
The value of the kyat has significantly decreased in recent years. The currency has lost about 70% of its value since the military coup in February 2021, and it is now worth around 4,000 kyat to the US dollar. This sharp decline is indicative of a serious weakening of the kyat and is almost identical to the low points seen in late August 2022. The kyat is still weak in spite of the government’s attempts to stabilize the market, which have included selling foreign currency and changing regulations.
The Myanmar Central Bank implemented about 20 measures in 2024 with the goal of bolstering the kyat. Selling foreign currency on the market, such as dollars, Thai baht, and Chinese yuan, was one of these tactics. Nevertheless, the attempts to stop the currency’s depreciation have not been entirely successful. This policy shift may be seen in the central bank’s current strategy, which emphasizes market sales rather than the mandated currency swaps and tougher rules on money changers that were part of earlier initiatives.
In Image: Myammar National Flag
The economy and everyday life of Myanmar have been profoundly impacted by the continuing devaluation of the national currency. The rising cost of imports and the rising cost of necessities have put a heavy financial burden on the populace. The cost of living has increased as a result of businesses passing on growing operating costs to customers. People with fixed or low incomes have been especially hard hit by this economic hardship, finding it difficult to keep up with the quickly rising costs of food, gasoline, and medical supplies.
In addition, the economic unpredictability fuels more general social and political problems. Public annoyance increases as the value of the kyat declines, increasing pressure on the administration headed by the military. Achieving political stability and economic recovery has become more difficult as a result of the ongoing inflation and suffering. The kyat’s and Myanmar’s economy’s future are still up in the air and rely on a variety of internal and external variables, such as global economic circumstances and geopolitical events.
Growing Prices and Inflation
The sharp increase in inflation that has resulted from the kyat’s depreciation is one of the most urgent problems. In Myanmar, the price of food has gone up by over fifty percent in the last year. These price increases have been publicized by state media; however, the statistics do not accurately represent the effect on consumers since they are based on wholesale pricing. For average individuals, the real cost of living has increased much more.
Due to rising costs brought on by the declining value of the kyat, local companies have been forced to raise prices on customers. This has caused prices to rise noticeably in a number of industries. For instance, when operators add more expenditures to meet their expenses, the price of gasoline increases. In a similar vein, the cost of medical supplies has increased by double or even triple, further burdening people and families.
“I have declined offers to dine outside and I have liquidated my collection of gold and jewels in order to cover the cost of medication,” said a young lady with arthritis, describing her personal struggle. Her story demonstrates the detrimental effects that growing medical expenses are having on people’s day-to-day lives.
These price increases have an effect on companies in general as well as on specific customers. A vicious cycle of escalating prices is perpetuated when businesses that are suffering with growing expenses are forced to pass these increases on to their consumers. People with little money suffer the most from this economic burden since it reduces their buying power and makes it harder for them to pay for necessities. This inflationary pressure has important wider economic ramifications that might hinder economic development and exacerbate Myanmar’s already severe economic predicament. The pressing necessity for strong economic interventions and stabilization measures intensifies as the cost of living keeps rising.
The Relationship Between Political Unrest and Conscription
In Image: Two woman riding in a boat
The military conscription, which went into effect on February 10th, has made Myanmar’s economic problems worse. Young people are traveling across borders in an attempt to avoid conscription, which has increased demand for foreign currency like dollars and baht. The demand for these currencies has increased as a result of the flight, further straining already unstable exchange rates.
The continuous war between armed ethnic groups and the military is another factor contributing to the volatility of the economy. Conflicts have been more intense since October, and a settlement is not in sight. The military administration, reacting to the unrest, has loosened earlier currency exchange and exchange rate controls in an effort to stimulate the economy. Notwithstanding these initiatives, local companies have had to raise costs as a consequence of the ongoing fall in the value of the kyat, which has an effect on customers.
Economic Repercussions of Kyat Depreciation: Key Challenges and Impacts
- Inflation Surge: Food costs have risen by more than 50% in the last year due to the sharp increase in inflation brought on by the kyat’s devaluation. Because the figures are based on wholesale pricing rather than real retail experiences, state media stories have not adequately reflected the genuine effect on consumers.
- Rising expenses for Businesses: As a result of the kyat’s depreciating value, local businesses are compelled to pass on rising operating expenses to customers. This is seen in a number of industries, including gas, where prices have increased as operators pile on more costs. In addition, the cost of medical supplies has increased by double or even treble from their former levels, further burdening families financially.
- Personal Financial pressure: Rising living expenses are causing people to feel a great deal of financial pressure. A young lady with arthritis spoke up about her personal struggles, telling how she had to sell personal items and cut down on eating out in order to pay for her medicine due to growing medical costs.
- Extended Economic Consequences: Inflation and growing costs are having an effect not just on families but also on companies and the economy as a whole. The vicious cycle of rising prices and falling buying power has the potential to choke economic expansion and exacerbate Myanmar’s economic crisis, underscoring the urgent need for practical stabilization measures.
The Price in Humans
The economic crisis has had a significant impact on the population of Myanmar’s daily lives. Many people now find it more and more difficult to buy basic essentials due to rising costs for necessary items and services. Healthcare access is in crisis due to the rising cost of medical items and supply constraints. People who need to take medicine on a daily basis or who have chronic illnesses have significant financial constraints.
Companies are finding it difficult to handle the strains of the economy. Customers’ financial burden has increased as a result of many having to raise prices to cover rising costs. The downward trend in currency value and the upward price cycle provide difficulties for consumers and companies alike.
Beyond only financial hardships, the human cost of this economic turbulence affects people’s general well-being and quality of life. Many people have been forced to make tough decisions due to financial difficulty, such as reducing non-essential spending or skipping important services. Families are compelled to put essential expenses ahead of discretionary expenditure, which lowers their quality of life and fuels a rising feeling of financial insecurity.
Moreover, as untreated medical issues may impair health outcomes and reduce productivity, being unable to afford proper healthcare is a major public health concern as well as a financial one. Widespread economic hardship is weakening social cohesion, aggravating mental health issues, and emphasizing the urgent need for all-encompassing support networks to lessen the crisis’ effects on the people of Myanmar.
Final Thoughts
Political unpredictability, currency devaluation, and inflation all interact to cause Myanmar’s economic problems. The cost of life has increased significantly as a result of the kyat’s dramatic decrease in value, impacting everything from food and petrol to medical supplies. The ongoing political unrest and the military conscription, which have increased the economy’s general volatility, have made the situation worse.
“The government and central bank are still working through these problems, so things are still a moving target. The present state of the economy is a hard reality that has a significant influence on the everyday lives of many inhabitants of Myanmar. The interaction between economic results and political choices highlights how complicated the situation is and how important it is to keep giving individuals impacted by the crisis assistance and attention.”