Burma is a resource-rich country with a strong agricultural base. It also has vast timber and fishery reserves and is a leading source of gems and jade. Tourist potential is great but remains undeveloped because of weak infrastructure and Burma's international image, which has been damaged by the junta's human rights abuses and oppression of the democratic opposition. The economy has been affected further by recently imposed U.S. sanctions, including a ban on the importation of Burmese products into the U.S. and a ban on the exportation of financial services from the U.S. to Burma.

Long-term economic mismanagement under military rule has prevented the economy from developing in line with its potential. Burma experienced 26 years of socialist rule under the dictator, General Ne Win, from 1962-1987. In 1988 the economy collapsed, and pro-democracy demonstrators took to the streets. The military government violently put an end to the civil unrest and pledged to move toward a market-based economy. Although some aspects of economic policy have changed, the state remains heavily involved and additional, much needed reforms have not been forthcoming.

The regime's mismanagement of the economy has created a downward economic spiral. The vast majority of Burmese citizens now subsist on an average income of only about $300 per capita. Rampant inflation, caused primarily by public sector deficit spending, stagnant wages, and the eroding value of the local currency (the kyat) have undermined living standards. The limited move to a market economy appears to have favored crony capitalism. A handful of companies loyal to the regime has benefited from policies that promote monopoly and privilege.

Burma has a mixed economy with private activity dominant in agriculture, light industry, and transport. However, state-controlled activity predominates in energy, heavy industry, and the rice trade. The military, through its commercial arms, also plays a major role in the economy of Burma.

Burma remains a primarily agricultural economy with 57% of GDP derived from agriculture, livestock and fisheries, and forestry. Manufacturing constitutes only 9% of recorded economic activity, and state industries continue to play a large role in that sector. Services constitute nearly 8% of GDP.

Foreign investment increased markedly in the early to mid-1990s, but has declined precipitously since 1999 due to the increasingly unfriendly business environment and mounting political pressure from Western consumers and shareholders. The government has tried hard to conserve foreign exchange by limiting imports and promoting exports. Published estimates of Burma's foreign trade (particularly on the import side) are greatly understated because of the volume of off-book, black-market, illicit, and unrecorded border trade.

In the near term, growth will continue to be constrained by poor government planning and minimal foreign investment. A number of other countries, including the members of European Union, Canada, Australia, Japan, and Korea, have joined the United States in applying some form of sanctions against the regime.

Government economic statistics are unavailable or very unreliable. According to official figures, GDP growth has been over 10% annually since FY 1999-2000. However, the real numbers are likely much smaller. Burma's top export markets include Thailand, India, China, and Singapore. Burma's top export commodities include clothing, natural gas, wood and wood products, and fish and fish products.

Burma was the world's second-largest producer of illicit opium in 2002. Burma also has been the primary source of amphetamine-type stimulants in Asia, producing hundreds of millions of tablets annually. The Burmese Government has committed itself in recent years to expanded counternarcotics measures.