Vientiane (VNA) – The Lao economy is expected to recover in 2023 thanks to measures to increase new investment and enhance the production of renewable energy and mining activities, according to the Asian Development Bank (ADB).

A consortium of lenders is preparing finance for the 600-megawatt Monsoon Wind project which, once completed, will export all the power it generates and be Southeast Asia’s biggest wind energy project, stated an update in ADB’s flagship publication, Asian Development Outlook (ADO) 2022.

Energy exports will remain robust with seven hydropower projects scheduled to come online in 2022, adding 4.1 billion kilowatt hours to Laos’ export earnings. The current account deficit is expected to narrow to the equivalent of 4.5% of GDP from 5% in 2021 on buoyant export growth outpacing imports, it said.

The ADB also stated that a recovery in domestic demand is expected to stimulate imports of capital and consumer goods in 2023, widening the current account deficit to 5.5%.
However, the ADB has lowered its 2022 economic growth outlook for Laos to 2.5% from 3.4% projected in April and to 3.5% from 3.7% for 2023.

The ADB significantly revised its forecast for inflation up to 17% for 2022 on higher-than-expected oil prices and the weaker kip.

The year-on-year inflation rate increased from 30.01% recorded in August to 34% in September, according to the latest report from the Lao Statistics Bureau.
Inflation next year is expected to moderate to 4.5% on lower global oil prices.

Low interest loans for local food producers to buy agriculture inputs should help boost domestic food production and relieve pressure on food prices, according to the ADB.

The downgraded economic growth forecast comes amid sluggish global demand and the tightening of monetary policy to manage inflation./.