Rice fields in Laos

Laos Economic Forecast

Laos Economic Outlook

Following an acceleration in GDP growth in 2022 spurred by looser Covid-19 restrictions and increased traffic via the Laos-China railway, growth prospects are precarious this year. Rising public debt—already projected by the IMF to have reached over 120% of GDP at the end of 2022—and FX shortages will have constrained economic activity. On top of this, inflation averaged over 35% in January-August, FX scarcity persists, and the currency continues to depreciate. These factors have exacerbated the country’s cost-of-living crisis and likely strained private spending. More positively, in late August, a meeting between business operators was held in Vientiane to strengthen trade ties with China and encourage investment in Laos.

Laos Inflation

Inflation fell to 25.9% in August (July: 27.8%), largely on a high base effect. Our panel expects inflation to decline further in what remains of 2023. However, the depreciation of the kip and low foreign reserves will continue to fuel price pressures. The El Niño weather pattern stoking food prices poses an upside risk.

This chart displays Economic Growth (GDP, annual variation in %) for Laos from 2013 to 2022.

Laos Economic Data

2018 2019 2020 2021 2022
Population (million) 7.1 7.2 7.3 7.4 7.5
GDP (USD bn) 18.1 18.7 19.0 18.8 15.7
GDP per capita (USD) 2,553 2,599 2,593 2,536 2,103
GDP (LAK bn) 152,414 162,657 171,705 182,584 220,695
Economic Growth (Nominal GDP, ann. var. %) 8.3 6.7 5.6 6.3 20.9
Economic Growth (GDP, ann. var. %) 6.2 5.5 0.5 2.5 2.7
Fiscal Balance (% of GDP) -4.7 -3.3 -5.6 -1.3 -1.6
Public Debt (% of GDP) 60.6 69.1 76.0 92.4 -
Money (ann. var. of M2 %) 8.4 18.9 16.3 24.0 36.9
Inflation (CPI, ann. var. %, aop) 2.0 3.3 5.1 3.8 23.0
Exchange Rate (LAK per USD, eop) 8,551 8,888 9,279 11,155 17,210
Exchange Rate (LAK per USD, aop) 8,415 8,706 9,053 9,737 14,279
Current Account Balance (USD bn) -1.6 -1.3 -0.2 0.4 0.0
Current Account Balance (% of GDP) -9.1 -7.0 -1.2 2.4 -0.1
Merchandise Trade Balance (USD bn) -0.9 -0.5 0.7 1.4 1.0
Merchandise Exports (USD bn) 5.4 5.8 6.1 7.7 8.2
Merchandise Imports (USD bn) 6.3 6.3 5.4 6.3 7.2
Merchandise Exports (ann. var. %) 11.0 7.4 5.3 25.8 6.5
Merchandise Imports (ann. var. %) 11.4 -0.7 -14.4 16.8 15.4
Foreign Direct Investment (USD bn) 1.4 0.8 1.0 1.1 0.5
International Reserves (USD bn) 1.0 1.1 1.4 1.5 1.2
International Reserves (months of imports) 1.9 2.1 3.1 2.8 2.0
External Debt (USD bn) 15.5 16.6 17.4 17.2 -
External Debt (% of GDP) 85.6 88.4 91.8 91.3 -

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