Economic growth easing but still strong
Economic growth easing but still strong
Although still expanding at a relatively rapid rate, growth in the Lao economy is slowing, reflecting trends in larger nearby economies as well as fiscal tensions domestically.
These were the comments from an expert who believed the economy would expand at seven percent per annum over the next few years after experiencing a growth rate of at least eight percent in the past two years.
The rapid expansion of the Lao economy in the last few years has been reflected in the government's recent financial crisis, the Lao National Economic Research Institute Director General, Dr Leeber Leebouapao told Vientiane Times recently.
“For socio-economic development, we don't need to force more rapid growth because that would create higher debt, an inflation rate issue, affect financial stability and is not sustainable,” he said.
However, domestic investment is increasing each year especially property development.
He commented that if the country's economy expanded smoothly at a stable rate it would be better because the government could more easily manage financial stability for development.
If the country's economy grew too fast, it would require greater budget spending for development and result in the government finding it difficult to smoothly manage the economy, said Dr Leeber.
Many concession investment projects have been suspended for breaching conditions to prevent adverse environmental and social impacts, while numerous public projects have been cancelled to reign in expenditure as they were originally implemented without the financial approval of the National Assembly.
According to international financial institutions, including the Asian Development Bank and the World Bank, the Lao economy has seen remarkable growth over the past five years due to the export of natural resources including mining, rising investment and hydropower output.
The government has lowered the economic growth target from 8 percent to 7.5 percent this fiscal year (2014-2015) as part of efforts to maintain macroeconomic stability according to the Ministry of Planning and Investment.
In 2011, the government projected that Laos should see at least eight percent economic growth annually from 2011 to 2015, which would create a solid foundation for the country to declare itself as having graduated from the UN's list of least developed nations by 2020.
The government achieved eight percent economic growth over the first two years of the implementation of its five year plan but is now struggling to fulfil the ambition due to delayed implementation of various mega investment projects.
The government has now cut its investment in public infrastructure after allowing huge investment in line with the long term investment programme. To achieve 7.5 percent economic growth, Laos needs to inject 39.69 trillion kip (US$4.9 billion) into the economy.
vientiane times
