Laos Economic Outlook
A resource-rich but underdeveloped economy:
Laos, a landlocked country in Southeast Asia, relies heavily on hydropower, mining, and agriculture for economic growth. The country has experienced rapid expansion in recent decades, with GDP growth averaging around 7% before the pandemic. However, economic development remains uneven, and Laos faces challenges including a high debt burden, limited infrastructure, and a small industrial base.
Hydropower and energy exports:Laos has positioned itself as the “Battery of Southeast Asia” by investing heavily in hydropower projects. The country exports electricity to Thailand, Vietnam, and China, generating crucial foreign exchange earnings. However, environmental concerns, displacement of local communities, and financial risks associated with large dam projects have raised questions about the sustainability of this model.
Debt concerns and China’s influence:Laos has taken on significant debt, much of it from China, to finance infrastructure projects such as railways and power plants. The China-Laos high-speed railway, completed in 2021, is expected to boost trade and connectivity, but the country’s growing debt-to-GDP ratio poses long-term economic risks. The reliance on Chinese loans has also sparked concerns over sovereignty and economic dependence.
Laos economic outlook:While Laos’ economy is expected to continue growing, it will likely do so at below pre-pandemic rates, with a heavy debt burden and lack of economic diversification present challenges. Expanding industries beyond hydropower, improving governance, and enhancing human capital will be critical for long-term prosperity. Without structural reforms, Laos risks falling into a debt trap and struggling with financial instability.
Laos' Macroeconomic Analysis:
Nominal GDP of USD 15.8 billion in 2023.
Nominal GDP of USD 15.8 billion in 2023.
GDP per capita of USD 2,090 compared to the global average of USD 10,589.
GDP per capita of USD 2,090 compared to the global average of USD 10,589.
Average real GDP growth of 4.9% over the last decade.
Average real GDP growth of 4.9% over the last decade.
Sector Analysis
In 2022, services accounted for 44.0% of overall GDP, manufacturing 9.2%, other industrial activity 30.7%, and agriculture 16.1%. Looking at GDP by expenditure, private consumption accounted for 65.7% of GDP in 2016, government consumption 14.0%, fixed investment 29.0%, and net exports -8.7%.International trade
In 2021, manufactured products made up 25.1% of total merchandise exports, mineral fuels 27.4%, food 14.5%, ores and metals 12.1% and agricultural raw materials 10.3%, with other categories accounting for 10.6% of the total. In the same period, manufactured products made up 57.9% of total merchandise imports, mineral fuels 14.3%, food 16.1%, ores and metals 1.1% and agricultural raw materials 6.0%, with other goods accounting for 4.6% of the total. Total exports were worth USD 9.40 billion in 2024, while total imports were USD 8.70 billion.Main Economic Indicators
Economic growthThe economy recorded average annual growth of 4.9% in the decade to 2024. To read more about GDP growth in Laos, go to our dedicated page.
Fiscal policy
Laos's fiscal deficit averaged 3.3% of GDP in the decade to 2023. Find out more on our dedicated page.
Unemployment
The unemployment rate averaged 2.3% in the decade to 2023. For more information on Laos's unemployment click here.
Inflation
Inflation averaged 9.0% in the decade to 2024. Go to our Laos inflation page for extra insight.
Monetary Policy
Laos's monetary policy rate ended 2023 at 7.50%, up from 5.00% a decade earlier. See our Laos monetary policy page for additional details.
Exchange Rate
From end-2014 to end-2024 the kip weakened by 63% vs the U.S. dollar. For more info on the kip, click here.
Economic situation in Laos
According to a World Bank estimate, Laos' economy grew by 4.1% last year, falling short of the ASEAN average and well below the country’s pre-pandemic 10-year average. Economic momentum was likely hindered by tight fiscal policy, a shrinking workforce resulting from emigration, a weak kip, and one of the highest inflation rates in Asia. However, tourism provided a significant lift, with visitor numbers surpassing 4 million—up from 3.4 million in 2023—driven by visa exemptions and improved connectivity via the Laos-China railway. Additional areas of strength included electricity generation, potash production, electronics, and exports of cassava and rubber. So far this year, economic activity is likely gaining from easing price pressures and the 56% minimum wage hike announced last September. However, the tourism industry could be losing steam due to the expiration of visa exemptions.Laos Economic Forecasts
Projections out to 2034.36 indicators covered including both annual and quarterly frequencies.
Consensus Forecasts based on a panel of 8 expert analysts.
Want to get insight on the economic outlook for Laos in the coming years? FocusEconomics collects projections out to 2034 on 36 economic indicators for Laos from a panel of 8 analysts at the leading national, regional and global forecast institutions. These projections are then validated by our in-house team of economists and data analysts, and averaged to provide one Consensus Forecast you can rely on for each indicator. This means you avoid the risk of relying on out of date, biased or outlier forecasts. Our Consensus Forecasts can be visualized in whichever way best suits your needs, including via interactive online dashboards , direct data delivery and executive-style reports which combine analysts' projections with timely written analysis from our in-house team of economists on the latest developments in the Laos economy. To download a sample report on the Laos' economy, click here. To get in touch with our team for more information, fill in the form at the bottom of this page.