Report: 7 percent economic growth projected over next two years
Report: 7 percent economic growth projected over next two years
The Lao economy is projected to grow at around 7 percent annually over the next two years, according to the latest edition of the World Bank’s Lao Economic Monitor, released yesterday.
The country’s growth, projected to be higher than other countries in the region, has moderated from the historical average and is driven by a pipeline of power projects and recovery in the agriculture and manufacturing sectors, as well as new opportunities prompted by closer regional integration.
According to the report, inflation pressures remain low, while credit growth has stabilised over the past year. The expansion of the power sector is expected to increase electricity export, while no-resource sectors such as tourism, trade and financial services are expected to benefit from closer regional integration and improved connectivity.
The country can also adopt reforms that will help sustain high growth and address some potential risks although exports and investment inflows may be impacted by economic and political uncertainty in the region.
The widening of Laos’ deficit to around 6.2 percent of its GDP in 2016 pushed up public debt to an estimated 68 percent of GDP.
Improved revenue collection and efficiency in spending, as well as adjustments in monetary and exchange rate policies, complemented strengthening the oversight capacity of the Bank of Laos which will also help in maintaining stability.
“Laos has maintained strong economic growth, which is a significant achievement,” said World Bank Country Manager for Laos, Ms Sally Burningham. “Reforms to improve tax administration and the efficiency of public spending can strengthen and sustain this growth-and that would translate into better health-care, education, quality of life, and opportunities for families and communities across the country.”
Although Laos has achieved strong economic development over the past decade, higher investment in human development, particularly health services, is a priority. High out-of-pocket spending deters the poor from using health services which then increases their vulnerability. Rates of maternal and child mortality in Laos remain high.
An increase in government spending on health services, combined with measures to enhance the efficiency and effectiveness of this spending, will be critical for the country’s efforts to attain universal health coverage by the year 2025 and improve health outcomes across the population.
“We support the recent increase in the country’s health budget, and encourage more to be done, as overall public sector spending on health care remains low, with average expenditure per capita among the lowest in the region. The government’s efforts to improve health-care services would brighten the future opportunities of this generation and the next,” said Burningham.
The Lao Economic Monitor is a periodic publication developed by the World Bank office in Laos.
