Lao economy maintains growth despite COVID-19 pandemic: World Bank
The World Bank predicts that gross domestic product (GDP) growth in Laos will rise to 3.6 percent this year, against a figure of 0.5 percent in 2020. (Photo: XINHUA/VNA Photo)
The Lao economy is on course for moderately improved growth in 2021, despite an outbreak of COVID-19 denting the promising economic recovery made earlier in the year, according to the World Bank.
The Bank’s latest Economic Monitor for Laos — A Path to Recovery — predicts that GDP growth will rise 3.6 percent in 2021, down from the 4 percent growth projected in March but still 0.5 percent higher than last year’s figure.
The forecast depends on various assumptions, including economic recovery in neighbouring countries, accelerated vaccination rates, and mitigation of community outbreaks of the virus over the rest of the year.
Growth could yet decline further if the COVID-19 outbreak worsens and strong lockdown measures persist, or if Laos again suffers repeated natural disasters such as flooding, drought, or outbreaks of livestock disease, the report said.
Agriculture and industry are driving much of the growth, with agricultural exports increasing, while electricity, mining and manufacturing exports have rebounded from the trade slowdown last year.
In tourism, hospitality, transport, and other services, however, lockdowns and the continuing curbs on international travel mean that most firms are struggling, depriving the country of a major income source, it said.
“Laos is doing well to contain the coronavirus and get vaccinations out across the population,” the new World Bank Country Manager, Alex Kremer was quoted by the Vientiane Times as saying.
“However, the risk of debt distress, a weak kip, and low government revenues continue to limit the government’s options for reviving the economy. Reforms that would boost private investment, tax payments, and trade would help in this matter,” he said.
According to the report, the falling value of the kip is causing inflation to rise, which in turn has led to worries about access to food and basic goods. This problem is particularly pressing for poor people in towns and cities.
To ease the effects of the economic slowdown, the report recommends that Laos increases the momentum on business reforms and trade facilitation so that it can properly benefit from new infrastructure and trade agreements. This can be achieved by streamlining current investment regulations and procedures, increasing the ease of doing business, lowering transport and logistics costs, and supporting improved product quality, especially for agricultural exports.
Lao Government is advised to expand support programmes for businesses which will help companies stay afloat and provide vital income and revenue.
The report also suggests the government adopt measures to help more Lao firms invest in digital technologies or new delivery methods to help companies turn crisis into opportunity.
Source from: Vietnam Plus. (2021). Lao economy maintains growth despite COVID-19 pandemic: World Bank. Retrieve from Vietnam Plus (August 23, 2021). https://en.vietnamplus.vn/lao-economy-maintains-growth-despite-covid19-pandemic-world-bank/206787.vnp