Myanmar's PMI index at all time low, gold at all time high

Myanmar's PMI index at all time low, gold at all time high
Published 28 April 2021
Nilar

YANGON - A key economic index for Myanmar has fallen to an all time low due to the political turmoil and Covid-19 impacts, according to research firm IHS Markit.

The so-called Purchasing Manager's Index (PMI), which indicates the overall health of an economy, and sub-indices such as GDP, inflation, exports, capacity utilization, employment and inventories, fell to 27.5 in March, compared to 27.7 in Febuary.

IHS cited lower manufactured goods as well as purchase orders and incomplete transactions, alongside factory closures and drop in the number of workers.

The Myanmar economy has also faced difficulties in sourcing raw materials while the value of the Kyat has plunged against US dollar - making imports more expensive.

Companies have been unable to match their growing expenses and were showing little, if any, increase in revenues.

The index, published by IHS Markit and supported by Japan-based Nikkei news group, showed that that business confidence in the manufacturing sector has been on the downward trend since September 2020.

Record breaking gold price, cash flow limited

Local gold price hit a record 1,460,000 kyat per Kyattha (1 Kyattha =~ 16.32 grams/0.5 oz) while the global price was at US$ 1790 per troy ounce on April 22.

This is compared to 1,048,500 kyat on Jan 3, 2019 and 1,063,000 on Jan 31, 2021.

The economy is also facing a financial squeeze as the Central Bank imposed restriction on cash withdrawal from banks.

One person can only withdraw up to 2,000,000 Kyat per week and 20,000,000 Kyat for a company. The restrictions came in February as police and military faced off protesters and there was a risk on bank run.

As of now, limit on cash withdrawal via ATM/POS is 500,000 per week per account as well. Long queues can also be seen almost daily at ATM/POS machines, as people flock to withdraw their cash in light of uncertainties.

AGD Bank is offering slightly different services as it announced on April 21 that its customers may draw up to 1,000,000 kyat per week, and up to 10,000,000 kyat per week for a company. Its ATM/POS machines will only allow 1,500.000 kyat per day.

There, however, are no restrictions to digital transactions and the Central Bank has urged people to use of online transactions instead of cash.

The Central Bank had said that it will lift the financial restrictions when the timing is right.