A new Asian Development Bank (ADB) report predicts that Laos will maintain relatively robust growth in 2015 and 2016, supported by the expansion of hydropower and services.
Growth is expected to moderate to about 7.0 percent in 2015 due to continued weakening domestic demand in some sectors, before picking up to 7.2 percent in 2016, according to the recently released ADB report.
“The Lao economy remains a strong performer in the region with Gross Domestic Product (GDP) growth in 2014 recorded at above 7 percent for a ninth consecutive year, though fiscal tightening and weaker global demand for minerals moderated the pace from 7.9 percent in 2013 to 7.4 percent,” said ADB Laos Office Country Director Ms Sandra Nicoll at yesterday’s press conference.
According to the ADB’s flagship annual economic publication, the Asian Development Outlook 2015 released yesterday, it is forecast that developing Asia will have a combined GDP growth of 6.3 percent in both 2015 and 2016. The region also grew by 6.3 percent last year.
“The outlook for 2015 for the Lao economy remains solid as the services and industrial sectors continue to contribute strongly. However the main challenges are to reduce expenditure to drive the fiscal deficit down to a more sustainable 3 percent of GDP and to rebuild the foreign reserves which are currently low, leaving the country vulnerable to adverse shocks,” Ms Nicoll said.
ADB Senior Country Specialist Mr Shunsuke Bando added “Falling oil prices will present opportunities for the governments of oil importing countries to eliminate subsidy policies or increase consumer taxes with minimal effect to households and business budgets.”
“The lower price of oil will also support economic growth in Asia, especially that of the industrialised countries. It will also lower inflation pressure and improve current account deficits,” he said.
Mr Bando added that economic growth in Laos is continuing but is still moderate compared to last year.
Despite the fact that the Lao economy is continuing to grow, the risk of economic fluctuations remains. However, the government is working to maintain macroeconomic stability, according to Mr Bando.
Meanwhile, ADB Senior Economics Officer Mr Soulinthone Leuangkhamsing also spoke about the predictions for the Lao economy, noting the forecast for continuous growth.
“Asean Economic Community integration will be a boon for economic growth in the Lao tourism sector,” he said, adding that improvements in services and other facilities will encourage foreign visitors to stay in Laos for longer and spend more money while they are here.
According to the report, economic growth in 2014 was 7.4 percent, down from 7.9 percent in 2013. Lower oil prices and slowing economic growth are forecast to trim year-average inflation to 3.5 percent for 2015.
In 2016, the ADB forecasts that inflation will be slightly higher at 4.0 percent as domestic pick-ups and prices of imported oil and foodstuffs trend higher again.
Electricity exports are also forecast to rise, although the prices of metals and some other export commodities will likely stay soft, according to the ADB.
Source: Vientiane Times