Lao economic recovery forecast for next year
Lao economic recovery forecast for next year
The Lao economy is expected to expand again next year as a number of hydropower plants will begin electricity generation for domestic consumption and export, according to a senior economist.
“The Lao economy will slow down this year but will begin to recover next year,” Director General of the Lao National Economic Research Institute Dr Leeber Leebouapao told Vientiane Times recently.
His prediction comes amid concerns that development in Laos will face a number of challenges due to the slowdown in economic growth.
According to a report from the institution, the Lao economy will see only 7.8 percent growth this year, dropping from 8.3 percent last year.
The government plans to maintain strong economic growth of at least 8 percent from 2011 to 2015, creating a foundation for the country to graduate from the UN list of least developed nations in 2020.
The World Bank and the Asian Development Bank also project the Lao economy will slow down this year as a number of mega-investment projects, in particular the construction of hydropower plants, have not been completed on schedule.
The cessation of gold mining in Savannakhet also contributed to the slowdown of the Lao economy.
The government's decision to stop public infrastructure projects that allow the private sector to invest upfront is also impacting the economy as a number of projects that may have gone ahead have now been cancelled or postponed.
Dr Leeber said one of the key drivers of Lao economic growth over coming years would be the hydropower sector, adding that a number of power plants are now under construction and expected to commence commercial operation nex t fiscal year.
At present, several mega-hydropower projects are now under construction such as Xekaman 1 hydropower plant, Nam Khan hydropower project, Huay Lam Phan project and the Hongsa Lignite plant. Xayaboury hydropowe r plant, the first Mekong dam in Laos, is now also under construction.
Dr Leeber said one of the major economic concerns in Laos was rising domestic debt, adding that if the government was unable to pay off the debts to investors there would be negative impacts on macro-economic stability.
At present, the government is paying greater attention to mobilising funds from all sources to pay of the debts as part of efforts to maintain economic stability.
Economists said despite Laos having achieved remarkable growth over the past years the Lao economy was still fragile as it is based on the resource sector, including mining. They urged Laos to further its efforts to diversify the economy to ensure sustainable development.
They also said the government should improve the business and investment climate to attract foreign investment in non-resources sectors. Laos has considerable investment potential in tourism as the country still has plenty of untamed tourist sites.
Agribusiness and logistics also have the business potential to attract foreign investment when the country becomes a part of the Asean Economic Community at the end of 2015.
vientiane times
