Lao economy to remain strong despite China slowdown
Lao economy to remain strong despite China slowdown
Laos will be able to maintain strong economic growth of at least eight percent this and next year despite China's economic slowdown and the European debt crisis, according to a senior economist.
“We expect that economic growth will remain strong, at least eight percent as earlier planned,” Lao National Economic Research Institute Director General, Dr Liber Leebouapao, said on Wednesday amid worries that the country will be negatively impacted by China's economic growth slowdown and the European debt crisis.
Members of the public understand that China is the second largest economy after the US in the world, and a slowdown in China will cause both direct and indirect impact for Laos' economic growth. The European Union is also a major aid provider and importer of Lao garment products.
Dr Liber admitted that the Lao economy would face negative impacts from the slowdown of Lao trading and its cooperation partners. However, he does not think that the impact would be so big as to force Laos to reduce its economic growth forecast for the next few years.
“The China economic growth slowdown will cause some impact to the price of export commodities of minerals and agricultural products such as rubber,” he said, adding that the relevant sectors should increase efforts to monitor the situation.
“The price of rubber went down over the past year as demand dropped due to a slowdown of the global economy.”
Laos-China bilateral trade is still small, therefore a slowdown of the Chinese economy would not have a huge impact. The main trading partners of Laos are Thailand and Vietnam.
According to a report from the Lao Ministry of Planning and Investment, the two way trade value between the countries reached US$1.05 billion in 2010, a 46.3 percent increase compared to the previous year. In 2011, the trade value of the two countries increased to US$1.28 billion, a 22.7 percent increase from the year before.
The Lao National Economic Research Institute unveiled its economic forecast in the middle of this year, the showing that Lao economic growth will remain strong at 8.22 percent this fiscal year and will continue to grow at the same level from 2013 to 2015.
The mining and hydropower sectors will remain the main driving forces of growth despite the government's plan to suspend new mining ventures and promote investment in the modernisation of agriculture, according to the institute.
Components of the service sector such as banking and real estate development will also play a significant role in boosting GDP growth in the short and medium term.
Dr Liber said that despite the European debt crisis, the export value of garments would not see a significant drop as most of the economies of Laos' trading partners such as Germany and France are still strong.
European Union officials in Laos also confirmed that they would not cut aid to Laos despite the European debt crisis.
vientiane times
