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Lao economy moves up a notch in rankings
Laos has emerged as a new lower-middle income country in the region after experiencing rapid economic growth over the past several years, according to the World Bank.
The bank has unveiled its annual classification of world economies on its official website, showing that the gross national income (GNI) per capita of Laos has reached US$1,010, moving the nation from the list of low income economies to that of a lower-middle income economy.
“Laos' GDP has grown faster in comparison with low income countries in the same region and also with some of its neighbours. Since the country is surrounded by some of the fastest growing economies in the world, it has benefited significantly from external demand and increased foreign direct investment inflows in recent years,” senior economist Geneviève Boyreau was quoted as saying in the annual report.
The economic growth of Laos has also been supported by internal structural reforms. The Lao economy has weathered the global financial crisis relatively well, relying partly on stimulating domestic demand, she said.
She expressed confidence that the growth of Laos' economy is expected to remain robust over the medium-term, provided that macroeconomic stability is preserved, domestic credit growth is kept in check to avoid pressures on domestic prices and the exchange rate, and structural reforms continue.
Ms Boyreau said that one of the major concerns is that the country is increasingly reliant on natural resources, particularly mining and hydropower.
“It will be critical for the government of Laos to manage its natural wealth over time and space to maximise economic benefits while limiting the potential negative social and environmental footprint.”
It's equally essential to diversify growth sources to the non-resource, more labour intensive sectors in order for the growth process to remain inclusive for all,” she said.
The World Bank uses GNI per capita estimates for its operational classification of economies which, in turn, determines their eligibility for concessional financing. Aside from Laos, Thailand is the only other Southeast Asian economy to have been given the new status.
According to the World Bank, countries with GNI per capita of US$1,005 or less are considered as low income economies, while countries with GNI of US$1,006 to US$3,975 and US$3,976 to US$12,275 are considered as lower-middle and middle income economies respectively.
Countries considered as high income economies must have GNI of about US$12,276 or more. The classification of the global economy is based on GNI per capita estimates using the Atlas method.
In the Asean region, countries still listed in the low income economy category are Cambodia and Myanmar, while countries listed as lower-middle income economies are Laos, Vietnam, Indonesia and the Philippines.
Malaysia, Thailand and Brunei are listed in the upper-middle income economy category, while Singapore is the only high income economy in Asean.
vientiane times
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