Why the generals' coup is weakening Burma's economy
Audio 03:52
Riot police block a street as protesters gather for a protest against the military coup in Yangon on February 6, 2021. (Photo illustration) AFP - YE AUNG THU
By: Dominique Baillard Follow
8 min
In Burma the mobilization against the coup d'état of the generals did not weaken.
Whatever its outcome, this putsch, after the Covid-19, is already a new calamity for the economy.
Publicity
The post Covid-19 rebound will not take place.
Following the coup d'état, most analysts have already revised their growth forecast downwards: it will rather be 2% this year, whereas the double was announced after a year of virtual stagnation in 2020.
The threat of sanctions, and especially the climate of uncertainty, could quickly dissuade foreign investors who finance large infrastructure projects.
In particular those with which the large conglomerates led by the putschist generals are associated.
It is a dilemma for private investors: should they break up like Kirin the Japanese beer brewer did?
The Frenchman Total is thinking.
The departure of the Western companies present, especially the Japanese, the most active in Burma, will deal a blow to the Burmese economy but in the medium term they could quickly be replaced by Chinese companies.
Beijing is the first investor after Singapore, and a big neighbor who is quite conciliatory with the junta.
This is why the threats of Western sanctions hardly worry the soldiers who have taken power.
Given the weakness of their trade with the United States, the effects of possible American sanctions appear to be quite limited, unless the Biden administration uses the ultimate weapon: the ban on all financial transactions. made in dollars or through American companies.
On the part of the Europeans, the Burmese especially fear losing the exemption from customs duties for their exports.
A preferential regime that has made Europe their second customer after China, the 27 absorb almost a quarter of Burmese exports.
Could the questioning of this regime be fatal for the textile industry?
This is a risk because Burma has become one of the major suppliers of European brands such as Mango, Primark and especially H&M.
Since 2010, textile exports have multiplied by 15 in value;
this activity currently employs more than 500,000 people.
But this risk seems limited, the head of European diplomacy, Josep Borrell stressed yesterday that the targeted measures should not strike the population.
A Burmese population which remains one of the poorest in the world, despite the growing openness of the economy.
Since 2010, growth has been galloping, on average by 7%, until the slowdown in 2019. The Burmese especially felt the benefits after Aung San Suu Kyi came to power in 2016.
In four years, poverty has halved, it still concerns one in four Burmese
The leader who is now under house arrest has also helped shape a more favorable investment environment with new financial regulations, the creation of a stock exchange, efforts to attract Western investors and thus counteract the influence of China.
Aung San Suu Kyi also deleveraged his country vis-à-vis this heavy creditor, the debt owed to China deflated by 26% during his tenure.
The Prime Minister also revised downwards the agreements made with Beijing, in particular for the construction of the large port on the Indian Ocean to link the province of Yunnan.
The bill went from seven to one billion dollars.
In short: Société Générale in the red
The third French bank is taking a net loss of 258 million euros for 2020. It is the Covid-19 of course that made it plunge, especially in the first half, the losses then amounted to 1.6 billion euros.
Since then, the bank has been backing up, but it will remain vigilant and will still seek to limit its costs in 2021.
Newsletter
Receive all the international news directly in your mailbox
I subscribe
Follow all the international news by downloading the RFI application
google-play-badge_FR
Burma
On the same subject
Burma: martial law, a bad omen for the future
Burma: Day 5 of protests, raid on Aung San Suu Kyi's party headquarters
Burma: tension mounts against anti-coup protesters