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Friday, 15 March, 2002, 13:47 GMT
Analysis: Burma's economic crisis
Rangoon fish market
The price of basic foodstuffs is soaring
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By Larry Jagan
BBC Burma analyst in Bangkok
Burma's economic crisis continues to deepen.

Unemployment is rising dramatically every month while prices of consumer goods are spiralling out of control. And the value of the local kyat on the informal market continues to tumble.

There is a very real risk of massive social unrest

Burmese economic analyst
"People are growing more and more dissatisfied every day," says a Burmese businessman in Rangoon who did not want to be identified.

"But if it continues like it is. It could easily reach boiling point in the coming months."

In the past few weeks the value of the kyat has fluctuated wildly - dropping by as much as 15% according to a Rangoon money changer. Economists and businessmen in Rangoon predict it will sink further.

Currency driven down

Economic analysts in Rangoon say the run on the currency is the result of increased domestic demand for dollars.

Average wages are well below subsistence levews
"Many local people need more dollars at the moment to pay for the new batch of mobile phones that have been released on to the market," says one financial analyst, "while others need dollars to buy gems in the government sponsored auction."

The fall in the kyat has also caused the cost of imported goods to rise.

Prices of meat, eggs and palm-oil are all up. Analysts in Rangoon estimate that palm oil - essential for cooking and imported from Malaysia - has risen by more than 50% in the last six months.

Rice price soars

Now even the price of rice is out of control. Local residents complain that market prices have risen by more than 20% in the past month. In some rural areas, residents report a three-fold price increase over the past three months.

People are really feeling the pinch

Rangoon-based Western diplomat
"This is largely because of the government's obsession with meeting its export target of a million tonnes by the end of next month," says a financial consultant with a foreign investment firm in Rangoon.

In the past the ruling generals kept the price of rice relatively stable by controlling the supply. But the last time they released stocks from the government reserves was more than six months ago.

Even the price of bribes, such as those necessary to keep a phone line, have risen.

Looming food crisis

But the real problem is that wages and salaries are not rising as prices increase. Local Burmese economists estimate an average family of five needs more than 80,000 kyat (about $110) a month to live, including food, medicine and transport but excluding luxury goods.

Pipeline construction
Human-rights groups say forced labour is still used in Burma
The average monthly income of a professional worker - teacher, university professor or government official - is less than 10,000 kyat ($13).

"People are really feeling the pinch," says a Western diplomat based in Rangoon.

"Comparisons are being drawn with the situation more than a decade ago that led to the events of 1988. The difference though, is then everyone suffered."

Many families, especially those living on the outskirts of Rangoon or in the poorer rural districts, can only afford to eat one meal a day.

Living standards of many Burmese are declining rapidly and UN officials fear a massive humanitarian crisis is looming.

They estimate that one child in three under the age of five is already suffering from malnutrition. If the situation remains unchecked, they fear that this could double within the next 12 months.

"People are getting increasingly dissatisfied with the situation," says a Burmese economic analysts close to the military.

"They are tolerating it at present, but if the situation continues to deteriorate over the next 12 months then there is a very real risk of massive social unrest."

Many in the government seem to understand this, and that is one of the main reasons the generals have started to talk secretly to the opposition leader Aung San Suu Kyi.

Even the deputy foreign minister Khin Maung Win privately admits that only political reform can save Burma from economic ruin.

See also:

13 Mar 02 | Business
Boom time for counterfeit trade
08 Mar 02 | Asia-Pacific
Burma turns on the charm
30 Jan 02 | Asia-Pacific
Aung San Suu Kyi meets Burma general
28 Jan 02 | Asia-Pacific
Bra company pulls out of Burma
11 Dec 01 | Asia-Pacific
Aung San Suu Kyi urges caution
10 Dec 01 | Asia-Pacific
Burma's military 'supports democracy'
05 Dec 01 | Asia-Pacific
Burma's slow road to reform
27 Aug 01 | Asia-Pacific
Burmese opposition backs talks
19 Jul 01 | Asia-Pacific
Analysis: Burma talks stalled
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