MOIT VIETNAM | ADB lowers Laos economic growth outlook for 2022 and 2023
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ADB lowers Laos economic growth outlook for 2022 and 2023
According to ADB's forecast, the Lao economy in 2022 will only grow by 2.5%, lower than the 3.4% previously given; growth in 2023 also lowered from 3.7% to 3.5%.
Lao press on September 22 reported that the Asian Development Bank (ADB) lowered its economic growth outlook for 2022 and 2023 compared to the previously made forecast.
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According to ADB's forecast, the Lao economy in 2022 will grow only about 2.5%, lower than the 3.4% set by the bank in April 2022. In its new forecast, ADB also lowered the Laotian economic growth in 2023 from 3.7% to 3.5%.
According to the ADB, a slower growth forecast for the Lao economy is linked to supply disruptions and higher commodity prices, which have increased inflationary pressures.
The ADB's updated report said the downgrade of Laos' growth forecast comes amid a slowdown in global demand and the country's tightening monetary policy to control inflation.
Although most of Laos' businesses have returned to normal in the first half of 2022, the number of international tourists has started to increase. However, volatile prices, especially oil prices, have increased the cost of living, causing domestic consumption to decline.
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The sharp increase in fertilizer, feed, food and fuel prices discourages activity in agriculture and manufacturing. These trends have delayed the economic recovery.
The Lao press quoted ADB Country Director for Laos, Sonomi Tanaka, as saying that “high prices are threatening the welfare of households in Laos, especially for poor households, leading to risks of food security and nutrition for families.
This is creating challenges not only for the people, but also for public finances. Therefore. There needs to be sound macroeconomic management, along with interventions to protect purchasing power to restore market confidence.”
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According to the ADB, fuel prices in Laos increased 13 times from January to September 2022, resulting in a 90.3% increase in diesel prices and a 62.3% increase in gasoline prices. In addition, from January 1 to August 2022, the kip also decreased by a third against the USD and Thai baht.
The inflation rate in August 2022 in Laos has reached a 22-year high of 30.01%, while the average inflation rate for 8 months of 2022 is 15.5%.
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