Laos’ inflation to fall sharply in 2023: ADB

Shoppers at a supermarket in Vientiane, Laos. (Photo: VNA)

Vientiane (VNA) – The Asian Development Bank (ADB) has forecast that the inflation in the Lao People’s Democratic Republic (Lao PDR) will average 23% in 2022 before falling to 10% in 2023.

According to the ADB’s Asian Development Outlook (ADO) 2022 Supplement released on December 14, inflation continues to accelerate in economies throughout Asia and the Pacific on high energy and food prices, mainly due to the Russia – Ukraine conflict. While global oil, gas, and food prices have fallen from their peaks earlier in the year, prices remain higher than before the conflict.

The bank also forecasts Laos' economic growth in 2022 will reach about 2.5%, down from the growth of 3.4% it estimated in its assessment made in April 2022. 

The lender also lowered its economic growth forecast for Laos in 2023 from 3.7% to about 3.5%.

“Inflationary pressures are expected to continue in the near term, aggravated by central banks’ policy tightening globally amid a weaker local currency,” said ADB Country Director for the Lao PDR Sonomi Tanaka. 

“It is important that coordinated efforts are made to address the effects of currency weakness on domestic inflation—especially for food and fuel items—as price volatility on these goods disproportionally impacts the poor and vulnerable,” he said.

The financial institution also recommends developing a local currency government bond market in Laos to strengthen economic recovery momentum and build resilience to future shocks./.