MOIT VIETNAM | ADB Forecasts Moderate Economic Growth for Laos
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ADB Forecasts Moderate Economic Growth for Laos
ADB’s April economic report indicates that Laos' GDP is projected to grow by approximately 4% in 2024 and 2025. This growth will be bolstered by external demand in the services sector, including tourism, with an anticipated 4.2 million visitors in 2024, and benefits from improved transportation infrastructure. Additionally, ADB forecasts that Laos will attract more foreign investors, with clean energy projects playing a significant role in driving industrial growth.
However, alongside the projected economic growth, ADB also highlights concerns regarding rising inflation, continued depreciation of the kip, and persistent public debt issues, which pose substantial challenges to Laos' development. ADB’s Director in Laos, Sonomi Tanaka, stated, “Pressure from unsustainable debt and high inflation could slow down the country’s overall economic recovery.” Inflationary pressures are expected to persist as businesses raise prices to offset higher costs due to the weakening kip and increased wages. Consumer prices are anticipated to rise by an average of 20% in 2024, gradually decreasing to 7% by 2025. According to the National Statistics Center, Laos’ inflation rate in March was 24.9%, up 1.3% from February and 25% higher compared to the same period in 2023.
ADB notes that the rising inflation is causing prices for food, hotel services, and restaurants to outpace worker incomes, reducing the purchasing power of the majority of the population. This decline in household purchasing power is significant for Laos’ economic future. ADB predicts that more students may drop out of school and labor migration could increase as people seek employment opportunities elsewhere.
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