Lao economy expected to grow 4.2 percent next year hinh anh 1People join traffic in Vientiane, Laos (Photo: Xinhua/VNA)

Vientiane (VNA) – The Lao economy is projected to grow by 4.2 percent in 2022, driven by commercial production for exports and opportunities and benefits arising from the China-Laos Railway, reported Vientiane Times on December 17.

The rail link, which became operational recently, will enable Lao products, notably agricultural goods, to have better access to the Chinese market, according to the latest report from the Lao National Economic Research Institute.

The Lao government aims to make the country a regional hub and offer transit services. The country will also seek to capitalise on all the potential provided by the railway, officials said.

In 2021, the Lao economy is projected to grow at a rate of 3 percent, lower than the goal of 4 percent approved by the National Assembly.

The slower growth is being linked to the prolonged lockdown imposed to contain the spread of COVID-19. The pandemic interrupted economic activities and forced companies, retail and wholesale shops and factories to shut down, impacting employment rates.

The report said that the Regional Comprehensive Economic Partnership (RCEP), the world's largest free trade deal which will become effective from January 1, 2022, will create favourable conditions for more trade, foreign investment and tourism in Laos.

The acceleration of vaccination rates and people's adaptation to the "new normal" will enable Laos to reopen its borders, revitalise the services sector, and fuel the growth of production for exports.

The report forecast that the Lao economy will slightly recover in the medium term, but growth will be lower than the pre-pandemic level./.