Aung San Suu Kyi’s ruling NLD (“National League for Democracy”) party won a landslide victory at the parliamentary elections held on 8 November. The NLD thus repeated the success of the historic 2015 polls that followed the long military rule. Nearly 2 million people could not vote due to ethnic insurgencies and to the Rohingya community being denied voting rights. The main opposition party, the USDP, which is aligned with the army, is contesting the result on account of alleged fraud.


These elections are a personal success for NLD leader Aung San Suu Kyi, who remains very popular at home despite a mixed political and economic record, while international criticisms are persisting about the Rohingya humanitarian crisis. This is also another step in the country’s democratic transition. Still, the constitutional minority of 25% parliamentary seats reserved for the army continues to weaken the democratic system and strain relations with the government. This probably explains the NLD’s impressive outcome at the polls, first among the dominant ethnic group the Bamar, but also among ethnic minorities whose rebel groups have seen their fight against government forces gradually escalate. Hence, amending the army’s power of veto will remain an elusive goal for the government in the coming years. Despite its strong majority in parliament, the NLD is expected to continue to move its reform agenda (institutions, banking sector, business framework…) forward at a slow pace, not least because of the army’s persisting vested interests. In the medium to long term, ethnic conflicts will remain a major political risk clouding Myanmar’s outlook and stability. While restoring peace to the ethnic areas was a major goal for Aung San Suu Kyi in 2015, ethnic conflicts have intensified against the army over recent years. They could escalate further in the future and hit government infrastructure projects, including those related to the China-Myanmar Economic Corridor. In addition, the management of the Rohingya refugees – in theory 700,000 people to be repatriated from Bangladesh – will remain an embarrassment for the government as renewed US and EU sanctions are not ruled out.

The covid-19 shock is another obstacle clouding the short-term outlook as it has hit the economy through halted tourism, weaker commodity prices and exports for several months. However, after a 6.5% average in 2015-2019 under the first NLD government, GDP growth is expected to end the year in positive territory (around 2%), which highlights the economic resilience, diversification and a broadly contained virus spread. Macroeconomic fundamentals have deteriorated, particularly the current account deficit and public finances, but to a lesser extent than for most regional peers. Yet, faced with increased liquidity pressures in the context of the crisis, Myanmar has applied to the DSSI (Debt Service Suspension Initiative) and will thus keep its (low) debt service to official creditors on hold until mid-2021. As of next year, the recovery in GDP growth, exports and FDI will largely depend on the global evolution of the pandemic. In this context, Credendo is keeping its political risk ratings unchanged.

Analyst: Raphaël Cecchi – r.cecchi@credendo.com