Lao New Year consumer spending has positives and negatives
Lao New Year consumer spending has positives and negatives
Huge spending by local consumers during the week-long celebration of Lao New Year can have both positive and negative impacts on the national economy, a senior economist has commented.
Experienced independent economist Dr Mana Southichak said large amounts of spending is good for a consumer society like the United States of America and other nations as retail sales benefit the business sector and the government in the collection of additional taxes.
However, too much consumer spending is not good for Laos as the country imports more products, like food and fuel, than it exports; therefore excessive spending could mean more money is taken out of the country.
The best thing for Laos is to promote saving habits among families so that they have more money left to spend on the education of their children and healthcare, Dr Mana said.
Our Gross Domestic Product (GDP) is driven by productivity, not by spending so we need to carry out campaigns against extravagance.
The New Year saw rising demand notably in the food and transport categories, contributing to a boost in consumer spending nationally.
Hundreds of millions of US dollars have been circulated during this period which benefits local businesses and generates extra tax revenue for the government.
Nevertheless, too much short-term spending could impact on families' incomes and their ability to pay for other essentials.
This year, government officials received their salary before the New Year which enabled them to spend more during the festival.
The government has been promoting frugality, particularly the use of the State budget, ensuring that all financial resources are disbursed effectively for fundamental projects which will benefit local people.
During Lao New Year factories, businesses and government offices closed for the celebration, as the nation switched to consumption; however, the Lao economy is driven by productivity.
The celebration saw many tourist sites around the country crowded with people who were ready to spend.
Laos is one of the least developed countries in Southeast Asia with an economic growth rate of about 7 percent annually which is driven by productivity and the inflow of foreign investment.
The Ministry of Planning and In vestment reported the government needed 247 trillion kip (more than US$30.6 billion) over the five years from 2016-20 to boost economic growth to at least 7 percent annually in order to ensure that Laos can graduat e from the UN's list of Least Developed Countries by 2020.
