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Laos less susceptible to global inflation
Despite inflation threatening countries regionally and around the world as a consequence of higher food and energy prices, the World Bank has projected that inflation in Laos will remain steady at 5-6 percent this year.
The data was obtained as part of a larger World Bank report on the economic status of East Asia, and was presented to media on Monday at the World Bank office in Vientiane.
The report stated that the year-over-year inflation rate in Laos has declined notably in recent months and as of December is down to 5.8 percent as a result of lower food prices.
Food prices in Laos are less impacted by global trends due to agriculture that is largely subsistence based and due to relatively limited food imports and exports.
Inflation, which climbed to more than 8 percent during August-September 2010, dropped in December, driven by a fall in the rate of food inflation from 14.2 percent in September to 8.8 percent in December.
Prices of locally produced sticky rice, meats and vegetables declined during and after the wet season harvest.
According to the World Bank, the Lao government’s actions contributed to lower food inflation by releasing rice reserves to markets and temporarily banning rice exports from the country, and by maintaining a stable exchange rate.
Core inflation also decreased from 3.6 percent year-on-year in August to 2.4 percent in December. Annualised inflation was approximately 6 percent in 2010 and is projected for 5-6 percent in 2011.
The World Bank projected GDP growth in Laos to be 8.6 percent this year compared to 8.4 percent in 2010, driven by the natural resource and manufacturing sectors.
According to the report, while recent global food prices have had limited impact on Lao inflation, the recent rise in energy (Fuel) prices is likely to put inflationary pressures on the country.
The World Bank has advised developing countries to use appropriate measures to cope with inflation such as reducing import costs and increasing local production.
Developing countries were also urged to maintain open trade policies to benefit from continued growth.
Currently, many govern-ments worldwide are responding to inflation by raising central bank interest rates.
vieantiane times
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