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World Bank Optimistic About Growth Of Lao Economy

Source: Vientiane Times

The World Bank has predicted that Laos will see economic growth of 4.5 percent in 2022 and 4.8 percent in 2023 despite projected slower growth of the global economy.

However, the global economy is entering a pronounced slowdown amid fresh threats from Covid-19 variants and a rise in inflation, debt and income inequality that could threaten the recovery in emerging and developing economies, according to the World Bank’s latest Global Economic Prospects report.

Global growth is expected to decelerate markedly from 5.5 percent in 2021 to 4.1 percent in 2022 and 3.2 percent in 2023.

The rapid spread of the Omicron variant indicates that the pandemic will likely continue to disrupt economic activity in the near term.

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In Laos, the government has eased a number of measures and expedited the vaccination programme to enable the private sector to resume businesses, factories and investment projects to further boost economic growth.

The government reopened the country to international visitors this month in a bid to revitalise the tourism and service sectors which have been hit hard by the pandemic since 2020.

Economists believe the Laos-China railway will become an important route for trade and tourism exchange between China and countries in Southeast Asia.

Elsewhere, growth in the East Asia Pacific Region is projected to decelerate to 5.1 percent in 2022, reflecting a slowdown in China.

Growth in China is forecast to slow to 5.1 percent in 2022 due to the lingering effects of the pandemic and tighter regulations on certain segments of the economy, according to the World Bank.

Indonesia’s growth is expected to recover to 5.2 percent in 2022, supported by stronger domestic demand and elevated commodity prices, and is expected to reach 5.1 percent in 2023.

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Thailand’s economy is expected to recover gradually over the next two years, with growth picking up in 2022 and strengthening to 4.3 percent in 2023.

Growth in Malaysia will rebound to 5.8 percent in 2022 as domestic demand improves amid high vaccination rates, but then ease to 4.5 percent in 2023 due to fading support from exports and tightening fiscal and monetary policies.

A revival of activity because of better vaccination in Vietnam is expected to lead to growth of 5.5 percent in 2022.
 The projected growth rate in Cambodia is 4.5 percent in 2022 and 5.5 percent in 2023, while in the Philippines it is 5.9 percent in 2022 and 5.7 percent in 2023.

According to the World Bank, remittances remain subdued in countries that depend on intra-regional inflows, notably Laos and Myanmar.

Higher-than-expected inflation in advanced economies could induce an abrupt increase in global interest rates and lead to capital outflows, currency depreciations, domestic monetary tightening, and even financial stress in the most vulnerable economies.