Lao economy to grow slower than expected in 2023: ADB-Xinhua

Lao economy to grow slower than expected in 2023: ADB

Source: Xinhua

Editor: huaxia

2023-09-22 10:08:15

A vendor waits for customers at a market in Vientiane, Laos, on Jan. 9, 2023. (Photo by Tamon Huengmeexay/Xinhua)

VIENTIANE, Sept. 22 (Xinhua) -- The Asian Development Bank (ADB) has lowered the economic growth forecast for Laos in 2023 to 3.7 percent from 4 percent projected in April.

Economic growth in Laos is forecast to be slower than expected due to impacts from recent floods, macroeconomic pressures arising from unsustainable public debt and a weak Lao currency kip, according to an updated report released on Wednesday from the ADB website.

According to the ADB, the 2024 growth forecast was kept at 4 percent. Inflation is projected to remain high until year-end, lifting average annual inflation to 28 percent.

Rising food prices have affected households' purchasing power. Sound macroeconomic management, including stronger coordination across fiscal and monetary policies, is urgently needed to address the country's economic and financial challenges.

One of the main challenges for Laos is to rein in inflation. Although inflation dropped to 25.88 percent in August, down from 27.8 percent in July and 28.64 percent in June, the rate is one of the highest in the region. The weak kip is one of the main factors driving inflation, according to the Lao Statistics Bureau.

Consumer price inflation remains elevated, having peaked at 41.3 percent year-on-year in February before gradually declining to 25.9 percent in August. Food price inflation has been higher, averaging 45.6 percent in the first eight months of 2023, on imported food and higher production costs from imported agricultural inputs, according to the ADB report.

However, growth in the region was upbeat in the first half of 2023, driven by healthy domestic demand and the reopening of China after the COVID-19 pandemic.

Rebounding tourism, resilient service sectors, healthy money transfers into the region, and improving financial conditions all helped support economic activity, according to the bank.


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