Laos is projected to achieve gross domestic product (GDP) growth of 4% in 2023 and 2024 (Photo: VNA) Vientiane (VNA) – Laos’ economy is expected to grow moderately this year and next year thanks to therecovery in services and private sector investments as pandemic restrictionsare eased throughout the region, according to a new Asian Development Bank(ADB) report.
The ADB's flagship publication Asian Development Outlook (ADO) April 2023 forecasts Laos will achieve gross domestic product(GDP) growth of 4% in 2023 and 2024 while last year, the institution predicted a growth rate of 2.5% for the country.
Freshinvestment in renewable energy, including the 600-megawatt Monsoon Wind PowerProject funded by a financial package of 692.55 million USD, and borderreopening will give a boost to recovery.
With upgrades tomajor connectivity infrastructure complete and reopening of borders includingwith China, international tourist arrivals are projected to double to 2.6million in 2023 from a year earlier. Transit freight is expected to continueits steady expansion, with 1.3 million passengers and 1.9 million tonnes of cargotransported through the Laos–China railway in 2022.
However,according to the ADB, Laos still faces challenges, for examples, inflation pressurewill remain high in 2023, projected at 16%, before moderating to 5% in 2024.Prices are expected to climb as businesses pass on costs from imported goodsand wage increases to consumers.
Moreover,as Laos is planning to adjust its electricity tariffs, domestic consumption andthe job market are expected to remain weak.
Almost two-thirds of the population is currently in working age. Young workforce means that more people have potential to be productive andcontribute to economic growth. However, high inflation and comparatively lowwages mean that many workers are opting to work in neighbouring countries, wherethey can earn more, according to the ADB’s report.
The Ministry of Labour and Social Welfare estimates that the number of Lao citizensleaving their homeland for Thailand to find higher-paid jobs can increase to400,000-500,000 people. Meanwhile factories and businesses in Laos are strugglingto get enough workers to produce goods and ensure a successful and profitablebusiness.
ADBrecommends that the Lao government need a comprehensive programmes to addressesmacroeconomic vulnerabilities and challenges in the labour market.
Thegovernment should support local industrial development through regulatoryreform that improves the business environment./.
