Myanmar Spring Chronicle – Scenes from June 16
(MoeMaKa), June 17, 2026
Myanmar’s Economy Further Worsened by the Fallout from the Iran–U.S. War
According to the World Bank’s latest regular report released today, the war that began at the end of February when the United States and Israel jointly launched attacks against Iran has driven up oil and natural gas prices and made them more difficult to obtain. These developments are expected to further weaken Myanmar’s economy, which has already been severely damaged by the country’s ongoing civil war.
A year after the massive earthquake that struck Sagaing and Mandalay regions at the end of March last year and caused extensive economic damage, Myanmar now faces another shock from the fallout of the U.S.–Iran war. Rising prices and import difficulties for fuel, natural gas, fertilizers, and other essential commodities, combined with the military regime’s foreign-exchange conservation policies, are expected to impose additional heavy burdens on the economy.
According to the latest World Bank report, Myanmar’s economy is projected to grow by only 2 percent during the fiscal year from April 2026 to March 2027. Before the outbreak of the U.S.–Iran conflict, economic growth had been projected at around 3 percent. The World Bank has since revised its forecast downward due to the war’s impact.
Even before feeling the effects of the U.S.–Iran conflict, Myanmar’s economy was already suffering from the consequences of the domestic civil war. Now, external factors such as the conflict in the Middle East are contributing to fuel shortages, higher fertilizer prices, and obstacles to imports, creating serious repercussions for agriculture, transportation, and other productive sectors.
About a week after the Middle East conflict began, during the first week of March, Myanmar’s military government introduced an odd-even vehicle usage system. Subsequently, authorities imposed additional restrictions on fuel purchases, including verifying vehicle registration numbers and limiting the amount of fuel that could be purchased each week. With no effective fuel distribution plans for transportation and agriculture, farmers have increasingly struggled to get crops to markets on time. Rising transportation costs have also made marketing agricultural products economically unviable, leading many producers to incur losses.
Reports have emerged of seasonal crops such as tomatoes being discarded in production areas because transportation costs exceed potential sales revenue. Likewise, some farmers have stated they may stop cultivating rice in future years because selling harvested crops no longer generates sufficient returns.
Over the past five years, Myanmar’s agricultural sector has endured major disruptions from both the COVID-19 pandemic and the country’s armed conflicts. Between 2020 and 2022, pandemic-related restrictions caused delays and limitations in cross-border trade. As those restrictions eased, escalating military operations, battles for control of towns, and the military’s scorched-earth tactics—including the burning of villages—inflicted further damage on the economy.
Farmers have also faced growing burdens from taxes and fees imposed by various armed groups on the transport of agricultural inputs such as seeds, fertilizer, and fuel between different regions.
In addition to rising taxes linked to the conflict, labor shortages have become another major factor undermining the economy. The military’s enforcement of the conscription law, along with forced recruitment by some ethnic armed organizations, has prompted large numbers of young and middle-aged workers to leave the country. In many regions, businesses are struggling to operate because workers have either emigrated or been conscripted.
Under these circumstances, few would dispute that Myanmar’s prospects for economic growth appear increasingly bleak.
Beginning last year, the military government tightened border trade regulations and restricted import licenses in an effort to reduce foreign-currency spending. As a result, consumer goods, medicines, and industrial raw materials have become increasingly scarce and expensive. Although the exchange rate between the kyat and the U.S. dollar has not risen dramatically over the past two years, domestic commodity prices have nevertheless surged.
In connection with the U.S.–Iran conflict, the military government recently announced that it had reduced fuel imports by nearly 50 percent. According to its calculations, the current reduction in fuel imports could save approximately US$2 billion in foreign exchange over a full year.
At the same time, however, while military equipment and aviation fuel continue to face no apparent restrictions, the government is limiting imports of consumer goods, medicines, and fuel. This policy is likely to have significant consequences for both Myanmar’s economy and the daily lives of its people, with the effects expected to become increasingly visible in the near future.