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ADB raises Lao GDP forecast
Laos will be able to maintain strong and stable economic growth this year despite increasing global uncertainty, according to the Asian Development Bank (ADB).
The bank unveiled its annual publication Asian Development Outlook yesterday, which forecasts 8.1 percent growth for the Lao economy in 2011.
This is higher than the previous projection of 7.7 percent because of the increasing export value of electricity and mining products.
Laos' economic growth will take place amid global challenges, including a slowing demand for products from the US and European Union, which will lower GDP growth in many Asian nations including Thailand, Vietnam and Malaysia.
Despite strong growth, the ADB expressed concern over the growing inflation rate in Laos. The bank forecasted that Laos would experience 8.5 percent inflation due to the higher prices of imported fuel and food and continued credit growth.
The bank also predicted that GDP growth would drop to 7.6 percent in 2012 based on the assumption that the world economy is facing another recession, which will negatively impact the growth of exporting nations.
ADB Country Director Mr Chong Chi Nai said the bank would like the Lao government to continue to improve the investment and business climate as a measure to boost investment in the non-resource based sector, to ensure sustainable economic growth.
While economic growth in Laos remains strong it is driven by hydropower and mining and there is increasing concern about rising income inequality. Therefore, there is a need to diversify the country's economic base, he said.
“The private sector environment needs further improvement to support diversification and job creation for young people entering the workforce.”
ADB Country Deputy Dir ector Mr A. Barend Frielink said the bank would assist Laos in broadening economic bases and developing human resources to meet the needs of growing foreign investment.
The bank has provided large amounts of funding to the Lao government to develop vocational schools and if the country cannot supply a sufficient number of skilled workers, Laos would be forced to hire foreign nationals, he added.
vientiane times
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