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53319
Wed, 04/01/2009 - 15:44
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ADB: Laos’ economic growth to decline by 1.7 percentage points
ADB: Laos’ economic growth to decline by 1.7 percentage points
(KPL) The Lao national economic growth is expected to decelerate to about 5.5 per cent this year, downed from 7.2 per cent in 2008, and 5.7 per cent in 2010 as the global economy declines to its worst downturn in 50 years.
According to Asian Development Bank (ADB), the national economy performed above the regional average as it has limited exposure to the global financial crisis and has not yet fully integrated into the global and regional economy.
ADB flagship annual economic publication, Asian Development Outlook 2009, projects economic growth in Laos will fall to its lowest level in eight years.
However, the publication said that mining, agriculture and domestic consumption remain the main engines of growth in the country. Major events such as the 25th Southeast Asian (SEA) Games and the preparations for the 450th year anniversary of Vientiane as the national capital, will bolster domestic spending in 2009. In addition, the government measures to minimize the impact of the global financial crisis will help mitigate the crisis and lift growth in some sectors, especially agriculture.“Laos will emerge from the crisis in better form as is takes this difficult opportunity to built its capacity for sustainable development, broadening development base, emphasis on strengthening human resource development capacity, and accelerate necessary reforms,” said ADB Director for the Lao PDR, Mr. Gil-Hong Kim.
The annual average inflation is expected to ease to 5 per cent this year and 6 per cent in 2010 as prices of fuel, food and raw materials subsides. However, inflationary risks remain. Further strengthening of the US dollar, volatile oil and commodity prices, and a short-term price increase during the SEA Games in December will put some pressure on price.
The current account deficit will remain high in 2009 at around 16 per cent of GDP because of the declining value of exports, such as copper and other agricultural commodities. Country’s international reserves are likely to decline as foreign direct investments and remittance inflow wane.
The government must now ensure macroeconomic and financial stability to prevent the unwinding of recent development gains, including poverty reduction and the gradual improvements in trade and investment conditions.
The report cautioned that the government’s current budget plan may not be achievable as a result of the slump in global copper price and lower economic activities may affect its tax collections. The budget deficit is expected to widen to about 5 per cent in this 2008-2009 fiscal year.In addition, the authorities should prioritize its budget allocation for recurrent spending and capital development.
Last year ADB provided 11.4 million US dollars as grants, 10.5 billion US dollars as loans and 274.5 million US dollars as technical assistance to regional countries.
(KPL) The Lao national economic growth is expected to decelerate to about 5.5 per cent this year, downed from 7.2 per cent in 2008, and 5.7 per cent in 2010 as the global economy declines to its worst downturn in 50 years.
According to Asian Development Bank (ADB), the national economy performed above the regional average as it has limited exposure to the global financial crisis and has not yet fully integrated into the global and regional economy.
ADB flagship annual economic publication, Asian Development Outlook 2009, projects economic growth in Laos will fall to its lowest level in eight years.
However, the publication said that mining, agriculture and domestic consumption remain the main engines of growth in the country. Major events such as the 25th Southeast Asian (SEA) Games and the preparations for the 450th year anniversary of Vientiane as the national capital, will bolster domestic spending in 2009. In addition, the government measures to minimize the impact of the global financial crisis will help mitigate the crisis and lift growth in some sectors, especially agriculture.“Laos will emerge from the crisis in better form as is takes this difficult opportunity to built its capacity for sustainable development, broadening development base, emphasis on strengthening human resource development capacity, and accelerate necessary reforms,” said ADB Director for the Lao PDR, Mr. Gil-Hong Kim.
The annual average inflation is expected to ease to 5 per cent this year and 6 per cent in 2010 as prices of fuel, food and raw materials subsides. However, inflationary risks remain. Further strengthening of the US dollar, volatile oil and commodity prices, and a short-term price increase during the SEA Games in December will put some pressure on price.
The current account deficit will remain high in 2009 at around 16 per cent of GDP because of the declining value of exports, such as copper and other agricultural commodities. Country’s international reserves are likely to decline as foreign direct investments and remittance inflow wane.
The government must now ensure macroeconomic and financial stability to prevent the unwinding of recent development gains, including poverty reduction and the gradual improvements in trade and investment conditions.
The report cautioned that the government’s current budget plan may not be achievable as a result of the slump in global copper price and lower economic activities may affect its tax collections. The budget deficit is expected to widen to about 5 per cent in this 2008-2009 fiscal year.In addition, the authorities should prioritize its budget allocation for recurrent spending and capital development.
Last year ADB provided 11.4 million US dollars as grants, 10.5 billion US dollars as loans and 274.5 million US dollars as technical assistance to regional countries.
