Laos targets 8 percent GDP growth next fiscal year
The government plans to maintain strong economic growth next fiscal year despite facing a number of internal and external challenges.
The Ministry of Planning and Investment has completed a draft of the National Socio-Economic Development Plan for the 2012/2013 fiscal year, and plans to submit it to the cabinet and National Assembly for consideration and approval in June.
Under the proposed development plan, the government is targeting GDP of 80,500 billion kip (US$10.6 billion) in the 2012/2013 fiscal year, an increase of about 8 percent compared to the current fiscal year.
GDP is on track to reach 70,600 billion kip (US$8.8 billion) this fiscal year - an 8 percent increase compared to the previous year. The economic growth rate in 2011/2012 was down 0.3 percent on the plan due to widespread flooding.
To achieve 8 percent GDP growth next fiscal year, the government plans to mobilise total investment funding of 25,800 billion kip (US$3.2 billion), accounting for 32 percent of GDP.
Of this amount, state investment funding including official development assistance (ODA) is expected to contribute 8,772 billion kip, while the private sector is expected to contribute 14,190 billion kip, and bank credit is expected to contribute 2,823 billion kip.
Economists forecast that investment capital will result in 3 percent growth in the agriculture and forestry sector, accounting for 26 percent of the total GDP value, while the industry and service sectors are expected to see 15.5 percent and 6.5 percent growth to account for 31 and 37.2 percent of GDP value respectively.
They said one of the major challenges Laos is expected to face in the 2012/2013 fiscal year is the European debt crisis, which could have a negative impact on Lao exports, especially garments. The European Union is one of the major importers of Lao garment products.
The European debt crisis may also have a negative impact on ODA because the EU is a major donor. The government plans to hold talks with EU officials in the near future over the potential impact the ongoing financial crisis could have on development in Laos.
Unpredictable natural disasters can also pose major challenges for economic growth. In the past two years, Laos suffered serious flooding, causing widespread damage to agricultural and industrial production bases. Prime Minister Thongsing Thammavong has called on the sectors concerned to be ready to deal with further natural disasters this coming wet season.
On the positive side, economists say Laos will be able to maintain political stability, which will create confidence among potential investors. A large percentage of the Lao population is young and of working age, and can provide a strong workforce for growing investment and industry in the country.