Myanmar’s Economy shows tentative stabilization, but fuel shock intensifies pressures

The economic outlook remains subdued, with growth projected at 2 percent in FY2026/27.

YANGON, June 16, 2026 - Myanmar's economy was showing tentative signs of stabilization prior to the Middle East conflict, but activity remained weak and under strain, according to the latest Myanmar Economic Monitor released today by the World Bank.

Economic activity improved modestly through late 2025 and early 2026, supported by partial normalization after the March 2025 earthquake, some easing of power supply constraints, and pockets of resilience in manufacturing, construction, and services. However, output, sales, and profits remained well below pre-2021 and pre-earthquake benchmarks, reflecting continued constraints from power supply, weak demand, and limited policy space. Real GDP is estimated to have contracted by 2.0 percent in FY2025/26, despite modest improvement in activity toward the end of the fiscal year.

A fuel shock driven by Middle East tensions in early 2026 has amplified existing economic pressures. Higher fuel prices have raised transport and logistics costs, increased production and distribution costs, and intensified foreign exchange demand for fuel imports After easing through late 2025, inflation rose sharply from March 2026, reaching 24.6 percent year-on-year in April. This has further strained household welfare, particularly among vulnerable populations.

"While there are signs that economic conditions have stabilized, Myanmar's economy remains under significant strain," said Melinda Good, World Bank Division Director for Thailand and Myanmar. "Recent shocks continue to expose deep structural vulnerabilities, and without sustained improvements in the operating environment, recovery is likely to remain fragile."

The economic outlook remains subdued, with growth projected at 2 percent in FY2026/27, revised down from 3 percent prior to the fuel shock. The report highlights persistent risks to the outlook, including continued conflict, disruptions to trade and logistics, and external pressures such as weaker export earnings and global energy price volatility.

The Myanmar Economic Monitor also finds that the private sector is operating in an uncertain and challenging environment. Businesses face rising costs, administrative burdens, and uneven policy implementation. As a result, many firms are focused on survival rather than growth, further weakening prospects for job creation and income recovery.

"Many of Myanmar's business challenges stem from weak implementation of formal rules and inconsistent service delivery," said Kemoh Mansaray, World Bank Senior Economist. "Greater predictability and better coordination will be key to supporting firms, restoring confidence, and unlocking growth."