VIENTIANE, Laos, Aug 13 (NNN-KPL) – The World Bank is optimistic about economic growth in Laos, which is projected to rebound to 6.5 percent in 2019, rising from 6.3 percent recorded in 2018.
Despite continued fiscal tightening, the pickup is expected to be driven by robust investment in mega infrastructure projects, including the China-Laos railway, according to the World Bank’s Lao Economic Monitor, released on Monday in Lao capital, Vientiane.
Economic growth will also be driven by a resilient services sector, led by wholesale and retail growth associated with robust construction.
Meanwhile, Lao government remains committed to fiscal consolidation, to contain public debt in the medium term by tightening public spending and improving revenue administration. This should result in a decline in the fiscal deficit from 4.4 percent of GDP in 2018, to 4.3 percent in 2019.
Economic growth is rebounding, after declining in 2018, partly due to the impact of floods, local daily, Vientiane Times, on Tuesday (today), quoted World Bank Country Manager for Laos, Nicola Pontara, as saying, at the launch of the World Bank’s Lao Economic Monitor report in Vientiane.
“Looking forward, it will be important to improve the business environment to support private sector development, including the growth of small and medium enterprises. These measures can contribute to maintaining a stable macroeconomic environment, promoting job creation and reducing poverty and inequality,” he added.
Lao Senior Economist at The World Bank Lao Office, Somneuk Davading, said, compared to other countries in the region, economic growth in Laos remains strong and the nation is one of the top five countries in this dynamic region.
Nevertheless, he said, Lao government needs to continue its reform measures and further improve the investment climate to attract more capital.
Laos is vulnerable to external impacts and natural disasters, which can add fiscal pressure. Likewise, if compared to other countries in the region, foreign reserves in Laos are lower, according to economists.
The depreciation of the kip against the U.S. dollar and Thai baht is another concern for Laos, which could impact on debt serviceability, according to the report.
The World Bank report also notes the key constraints faced by small and medium enterprises, such as access to finance, competition with informal firms, and electricity outages. The report confirms that strengthening the performance of SMEs can improve the quality of jobs, generate income and contribute to the greater well-being of the Lao people.– NNN-KPL
