World Bank expects slower growth in Lao economy
World Bank expects slower growth in Lao economy
The growth of the Lao economy is estimated to moderate to 7.5 percent in 2014, while the growth outlook in 2015 is projected to slow, according to the latest World Bank update announced yesterday.
The report stated that the moderation to 7.5 percent growth in 2014 is due to lower direct output from the resources sector and some tightened fiscal measures.
Meanwhile the growth outlook in 2015 is set to slowdown, with a projected growth of 6.4 percent, reflecting the implementation timing of new power projects, the effects of tighter fiscal policy, an expected decline in wood exports after the recent surge, and projected mild growth in neighbouring countries.
Chief Economist of the World Bank’s East Asia and Pacific Region Mr Sudhir Shetty spoke via a video conference link from Singapore noting that smaller economies in the region will be required to look at the fiscal deficit reduction and to tighten monetary policy.
“In particular, Laos and Mongolia need to reduce the fiscal deficit and tighten monetary policy in order to deal with risk and embark on a path of sustainable growth,” he recommended.
Amongst the other Asean countries, Laos will be required to draw attention to education and skill development and improvements to the investment climate, Mr Shetty said in response to a question raised by a Lao economist via an electronic conference.
In 2014-15, the countries with a small population and small economy will be dependent on foreign assistance; yet somehow the rate of economic growth remains higher than the economies of other bigger countries.
According to the East Asia Pacific Economic Update released by the World Bank yesterday developing countries in East Asia Pacific will see slightly slower economic growth this year but the pace of growth in the region, excluding China, will pick up next year, as the gradual recovery in high-income economies increases demand for exports from the region.
“Still, developing East Asia Pacific remains the fastest-growing region in the world,” the East Asia Pacific Economic Update confirmed.
The World Bank Laos Office also announced that the key growth drivers in 2014 are expected to come from robust activity in the construction and construction-related industry in the resource sector and related spillovers, wood exports and services.
“Lao economic growth has moderated but it remains high, thanks to the contribution from the energy sector to boost other sectors,” the World Bank Laos Office’s Economist Ms Keomanivone Phimmahasay said.
As the forecast for economic growth is expected to see slower growth next year but in this case it will be a temporary episode. However the economists also warned the government to not only look at the figure of economic growth and stressed that reducing poverty rates should be a priority.
vientiane times
