Laos Economic Forecast

Laos Economic Outlook

January 28, 2020

Growth was likely healthy in 2019, aided by the ongoing construction of the Laos-China railway. Moreover, tourist arrivals were reportedly up 9% year-on-year, which should have supported the services sector. In addition, the external sector strengthened in Q1–Q3, with the current account deficit narrowing sharply on substantially higher goods and services exports. Turning to this year, strong electricity generation should be sustaining momentum thanks to the recent start of operations at the Xayaburi and Don Sahong dams. Meanwhile, in January, Moody’s assigned Laos a B3 credit rating—the first from a major rating agency—citing strong growth prospects balanced against weak institutions and environmental risks. The move signals the country’s growing economic maturity and could support financial inflows, although the rating is notably below investment grade.

Laos Economic Growth

Economic growth should remain robust this year, buoyed by infrastructure development and higher electricity exports thanks to new hydropower projects. However, measures to tame the fiscal deficit could restrain activity somewhat. Weak international reserves and significant dependence on China pose downside risks to the outlook. FocusEconomics Consensus Forecast panelists project GDP to expand 6.4% in 2020, which is down 0.1 percentage points from last month’s forecast, and 6.4% again in 2021.

Laos Economy Data

2014 2015 2016 2017 2018
Population (million)6.46.76.87.07.1
GDP per capita (USD)2,0752,1352,3092,4242,542
GDP (USD bn)13.314.415.816.918.0
Economic Growth (GDP, annual variation in %)7.67.37.06.96.2
Fiscal Balance (% of GDP)-3.9-5.6-5.1-5.5-4.4
Public Debt (% of GDP)56.553.154.255.857.2
Inflation Rate (CPI, annual variation in %)4.21.31.60.82.0
Policy Interest Rate (%)6.255.635.315.005.00
Exchange Rate (vs USD)8,0358,1228,1618,1968,313
Exchange Rate (vs USD, aop)8,0488,1358,1338,2548,415
Current Account (% of GDP)-14.5-15.8-8.8-7.5-8.0
Current Account Balance (USD bn)-1.9-2.3-1.4-1.3-1.4
Trade Balance (USD billion)-1.7-2.0-1.1-0.8-0.9
Exports (USD billion)3.33.74.24.95.3
Imports (USD billion)5.05.75.45.76.2
Exports (annual variation in %)44.711.516.214.88.7
Imports (annual variation in %)63.114.0-5.35.58.8
International Reserves (USD)0.91.00.81.20.9
External Debt (% of GDP)72.780.985.686.986.8

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Laos Facts

Value Change Date
Exchange Rate8,8850.31 %Jan 01

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