The economy of the Lao PDR is expected to pick up in 2016 and 2017 due to an expansion of electricity exports, construction, and services, a new Asian Development Bank’s (ADB) report says.

ADB’s flagship annual economic publication, the Asian Development Outlook 2016 which was launched in Vientiane yesterday says that the Gross Domestic Production (GDP) of Laos is expected to grow by 6.8% for 2016, up slightly from 6.7% in 2015, before rising to 7.0% in 2017.

The impact of slow growth in China on trade and investment is countered, in part, by the gradual recovery forecast for Thailand, which will aid exports, tourism, and remittances, as well as from robust growth in Viet Nam.

Electricity production is projected to maintain strong growth as more new hydropower plants come online this year, together with the 1,878 – megawatt Hongsa Thermal Power Plant, which will make its first full-year contribution to GDP.

Construction work on additional hydropower plants, new commercial and industrial and residential developments, and robust expansion of services driven by growth in tourism, finance and telecommunications, will also underpin GDP growth.

“Continued strength in energy and construction, and a strong expansion in services, will keep growth on a strong path over the next 2 years, and ensure the economy remains on track to be eligible to graduate from least-developed country status by 2020,” said Country Director of ADB’s Lao PDR Resident Mission Sandra Nicoll.

“The Lao PDR needs to strengthen its external position by pursuing fiscal and monetary policies to mitigate external vulnerabilities, by diversifying exports and by improving the domestic business environment to spur production,” she added.

Despite stronger tax collection efforts and restrained growth in public administrative spending, the fiscal deficit is expected to widen to 5% of GDP in 2016, compared to 4.7% last year, due to expected lower global demand and softer prices for gold and copper, which will weigh on revenue collection.

Lower oil prices will help sustain downward pressure on merchandise imports in 2016, while exports will rise mainly on increased sales of electricity to Thailand.

Inflation in 2016 is projected to remain subdued as a result of low forecasts for global oil prices and local food prices. Inflation was 1.3% in 2015 and is expected to rise slightly to 1.8% in 2016 before edging higher in 2017 due to projected higher oil prices.

Source:
courtesy of KPL NEWS AGENCY

by KPL

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