Lao Economic Growth Shrinks Amid Drop in Production, Spending

Source: RFA

Economic growth in Laos has slowed as production and consumer spending drop amid fears of a spread of the coronavirus, with growth expected to shrink by about 50 percent, sources say.

Even if the spread of the virus is partially controlled in Laos, which has reported only 16 confirmed cases as of Friday, consumer spending and production in the landlocked Southeast Asian country have fallen, a Lao economist told RFA’s Lao Service this week.

“Therefore, the forecast that GDP growth in Laos will drop by 50 percent is reasonable,” RFA’s source said, speaking on condition of anonymity.

“Tourism is the sector that has been hardest hit, with all businesses like hotels and restaurants related to tourism severely affected,” he said.

In a March 31 report, the World Bank predicted a growth this year in the Lao economy of 3.6 percent if the spread of coronavirus in the country remains under control, dropping to 2.2 percent if the situation grows worse.

Also speaking to RFA, a tour operator in the northern Lao province of Luang Prabang said the province has now seen a drop in economic activity of all kinds since a lockdown of entertainment districts was imposed on April 1.

“We’re literally trying to survive,” he said, adding, “There are no tourists, and all entertainment venues and guesthouses have now closed. This is a very difficult situation.”

“I’m still open, but there’s nobody walking by or buying anything,” added a shopkeeper in the Lao capital Vientiane.

“Everything is quiet, and when it gets dark, people lock their doors and sleep,” he said.

Migrant workers return

Lao’s economic problems are compounded by the rapid return from Thailand of a pool of suddenly jobless Lao migrant workers that the International Labor Organization estimates at 60,000 following Bangkok’s closure of its borders on March 23.

Provincial checkpoint officials on Lao’s side of the border with Thailand told RFA that Savannakhet province has over 27,000 returned workers, Champasak has 10,000, and Khammuan has more than 3,000.

Meanwhile, a nearly-finished railway project connecting landlocked Laos with China is facing construction delays because of manpower shortages resulting from the coronavirus crisis, according to local government officials.

Laos, which reported its first two cases of the deadly virus late last month, was spared the effects of the global pandemic for most of February and March, but Lao Prime Minister Thongloun Sisoulith has now ordered that nonessential workers remain home.

In some industries this has led to a complete shutdown, but in the construction sector, it has resulted in projects continuing with fewer laborers on hand.