Myanmar's economy could take a significant hit following this week's military coup, analysts say, as the U.S. mulls fresh sanctions and foreign investors appear rattled — potentially putting billions of dollars' worth of business investments at risk for the Southeast Asian country.

Citing "fraud" in the November general elections, Myanmar's military, known as the Tatmadaw, took control of the government on Monday — the same day the newly elected parliament was set to convene. Leaders of the National League for Democracy ruling party were detained, including State Counsellor and Nobel Peace laureate Aung San Suu Kyi, who has since been charged with illegally importing walkie-talkies. The military also announced blocks on Facebook, Instagram and Twitter.

The fate of the economy, which is already suffering because of COVID-19, will depend on what the military does moving forward, says Aye Min Thant, a journalist based in Yangon.

Before the pandemic, Myanmar's economy, which depends heavily on agriculture, oil and natural gas, the garment industry and tourism, was expected to grow by over 6% for fiscal 2019-2020. The World Bank estimates it only grew by 0.5%.

Many countries were swift to condemn the coup, including the U.S.

"We will work with our partners to support restoration of democracy and the rule of law, and impose consequences on those responsible," President Biden said in a speech at the State Department on Thursday.

A State Department spokesperson said the U.S. would conduct "a careful review of our current sanctions posture as it relates to Burma's military leaders and companies associated with them."

Analysts warn an imposition of broad U.S. economic sanctions in response to the coup could harm the country more by cutting it off from diverse foreign investment — while creating an opportunity for China to fill the vacuum.

"This changes everything"

The coup could lead to a "deep fear" in investors, a U.S.-based Myanmar trade expert says. The person did not want to be named for fear of retribution against family members in Myanmar by the military junta for talking to the media.

The coup instills a lack of business confidence in Myanmar because of how easily the military was able to carry it out "through means that were entirely undemocratic and condemnable," this expert says.

It has been 10 years since political, economic and diplomatic reforms opened Myanmar's economy to the world — changes brought by the military government at the time, and propelled further by the country's first democratic elections in 2015. In response, the U.S. began to lift sanctions, helping usher an investment frenzy into the country, whose neighbors include China, India and Thailand.

World Bank statistics show that Myanmar's economy grew by some 7% annually between 2011 and 2017. Businesses in Singapore, China and Hong Kong are the country's top investors, according to Myanmar's Directorate Of Investment and Company Administration.

U.S. businesses have invested some $326.5 million in Myanmar since 2016, with major U.S. brands such as Coca-Cola, Mastercard, Ford Motor Co. and General Electric forming partnerships and doing business there. In 2020, trade between the two countries reached nearly $1.3 billion — roughly 3.5% of all of Myanmar's total trade that year, according to the Ministry of Commerce.

But the military coup this week "changes everything," the Myanmar trade expert warns, and "economic fallout is going to be painful."

Following on the heels of Myanmar's repression of the Rohingya minority, which left some investors skittish, the coup adds to the reputational risks businesses face in investing in the country.

On Friday, Japanese beverage giant Kirin announced it was ending its partnership in Myanmar. The company released a statement saying "recent actions of the military in Myanmar ... are against our standards and human rights policy" and it had "no option but to terminate" its joint-venture partnership with Myanma Economic Holdings PLC, which has links with the military.

U.S. companies are watching and waiting. In an emailed statement to NPR, Coca-Cola spokesperson Debbie Ebalobo said the company is "concerned about the rapidly evolving situation in Myanmar" and is focused on the safety of all its employees there. Mastercard tells NPR in an emailed statement that the company is "monitoring the situation and there is no change in our operations in the country today."

If the U.S. imposes economic sanctions, some analysts believe they should be targeted against Myanmar's military leaders, many of whom are already subject to sanctions for their treatment of the Rohingya — including Commander-in-Chief Senior Gen. Min Aung Hlaing, who led this week's coup. Broad-ranging economic sanctions, such as those levied by the U.S. against Myanmar's past military governments, could hurt the whole country, some warn.

Aye Min Thant, the journalist, fears broad U.S. sanctions would "crater" Myanmar's garment industry, which relies heavily on female employees.

"And what will happen to direct investment? Who knows," Aye Min Thant says.

There's also the question of the effectiveness of such sanctions.

"Everything is so interconnected now," the Myanmar trade expert says. "People are starving for change, they want development, they want better lives and there's nothing anyone can do to stop that."

If the U.S. were to use sanctions to cut Myanmar off from business opportunities, experts believe the country would turn further toward China.

China's moment?

Wary of becoming too dependent on Beijing, as Myanmar was in the military-ruled decades leading up to 2011, Suu Kyi worked to balance business with China and other countries when it came to pursuing economic projects, says Debra Eisenman, managing director of the Asia Society Policy Institute.

"But with the military takeover, it may be that all these other countries no longer are able to invest in the same way due to sanctions policy, not wanting to invest with an authoritarian government or other kinds of fiscal controls," Eisenman says. "Where China is quite happy to do that."

China has urged Myanmar to "maintain political and social stability" following the coup, and, with Russia, blocked a U.N. Security Council resolution this week condemning the coup. China's state-run Global Times referred to the coup as a "major cabinet reshuffle."

The Tatmadaw and China "have likely remained close" over the years, Eisenman says, as China provides aid to Myanmar's military and the two work together on border security issues. A key link in Beijing's massive Belt and Road global infrastructure and trade initiative, Myanmar is China's most direct route to the Indian Ocean and South Asia.

Based on past performance, the Myanmar military's management of the economy is likely to be "pretty abysmal," Eisenman warns. Leaders will try to boost the military budget by taking funds from other government sectors, she believes — and the corrupt will line their own pockets by directing business to the large holding companies the military controls.

If China becomes the only foreign investor in Myanmar's economy, she says, "it will be devastating" for local businesses and partnerships.