Laos’ Gross Domestic Product (GDP) growth is expected to moderate to 6.4 percent due to lower external demand and credit growth that is offset by an increased contribution from the resource sector this year, according to the latest World Bank Report.
In addition, the East Asia Pacific region is expected to grow 6.5 percent in 2015, moderating slightly from 6.8 percent last year, while the rest of developing East Asia is expected to grow 4.6 percent, similar to the rate last year.
The report also mentioned that the rapid growth of the Lao economy is directly supported by robust investment in the power sector but the government should also look at the agriculture sector as most people are employed in this area.
Commenting on the report, World Bank East Asia and Pacific Regional Vice President, Axel van Trotsenburg, said growth in developing East Asia Pacific continues to be solid but the moderating trend suggests policy makers in the region must remain focused on structural reforms that lay the foundation for sustainable, long-term and inclusive growth.
“These reforms include regulatory improvements in finance, labour and product markets, as well as measures that enhance transparency and accountability,” he said, adding that these policies will reassure investors and markets, and help sustain growth that can help lift people out of poverty.
The World Bank also said that growth in the region is slower than anticipated due to the prevailing challenges, especially global economic tensions.
By 2016, the global economies will gradually recovery; meanwhile the Asean economy will also face several challenges in sourcing revenue.
Ideally located close to China, the CLM countries of Cambodia, Laos and Myanmar will significantly be an important investment and tourism destination for China.
The report assumes a gradual slowdown in the Chinese economy in 2016-17. This scenario is likely because China has sufficient policy buffers and tools to address the risks of a more pronounced slowdown, including relatively low public debt levels, regulations restricting savings outside of the banking system, and the state’s dominant role in the financial system.
The World Bank also advised that Laos will need to look at the agriculture sector as an important priority to ensure it properly generates revenues and incomes to most of the people employed in this field.
However, product diversification and improved education are areas the Lao government must actively improve in a bid to meet the demand for products and jobs when the Asean Economic Community comes into being at the end of this year.
Source: Vientiane Times