Laos’ economy is expected to grow moderately this year and next year thanks to the recovery in services and private sector investments as pandemic restrictions are eased throughout the region, according to a new Asian Development Bank (ADB) report.
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Laos is projected to achieve gross domestic product (GDP) growth of 4% in 2023 and 2024 (Photo: VNA) |
The ADB's flagship publicationAsian Development Outlook (ADO) April 2023forecasts Laos will achieve gross domestic product (GDP) growth of 4% in 2023 and 2024 while last year, the institution predicted a growth rate of 2.5% for the country.
Fresh investment in renewable energy, including the 600-megawatt Monsoon Wind Power Project funded by a financial package of 692.55 million USD, and border reopening will give a boost to recovery.
With upgrades to major connectivity infrastructure complete and reopening of borders including with China, international tourist arrivals are projected to double to 2.6 million in 2023 from a year earlier. Transit freight is expected to continue its steady expansion, with 1.3 million passengers and 1.9 million tonnes of cargo transported through the Laos–China railway in 2022.
However, according to the ADB, Laos still faces challenges, for examples, inflation pressure will remain high in 2023, projected at 16%, before moderating to 5% in 2024. Prices are expected to climb as businesses pass on costs from imported goods and wage increases to consumers.
Moreover, asLaosis planning to adjust its electricity tariffs, domestic consumption and the job market are expected to remain weak.
Almost two-thirds of the population is currently in working age. Young workforce means that more people have potential to be productive and contribute toeconomic growth. However, high inflation and comparatively low wages mean that many workers are opting to work in neighbouring countries, where they can earn more, according to the ADB’s report.
The Ministry of Labour and Social Welfare estimates that the number of Lao citizens leaving their homeland for Thailand to find higher-paid jobs can increase to 400,000-500,000 people. Meanwhile factories and businesses in Laos are struggling to get enough workers to produce goods and ensure a successful and profitable business.
ADB recommends that the Lao government need a comprehensive programmes to addresses macroeconomic vulnerabilities and challenges in the labour market.
The government should support local industrial development through regulatory reform that improves the business environment./.