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Laos economic growth to reach 8.2% despite floods: Economist
Economic growth will reach at least 8.2 percent despite the negative impacts from the recent floods, a senior economist predicts.
Lao National Economic Research Institute Director General, Dr Liber Libuapao, said on Monday economic growth would not drop below 8.2 percent despite the widespread flooding in the country at the height of the rainy season.
“The floods will certainly have an adverse impact on growth but not to the extent that the World Bank forecasts,” he told Vientiane Times.
Dr Liber, who is widely regarded in Laos, made the comment yesterday after the World Bank cut its GDP growth forecast for Laos this year from 8.6 percent to 8 percent in the wake of severe flooding caused by two major typhoons, Nock-Ten and Haima. The storms severely affected agricultural production in September and October.
The bank also forecast GDP growth of 7.5 percent growth next year, lower than the government's target of 8 percent.
Dr Liber said it was normal for the World Bank to estimate GDP growth lower than that expected by the government.
He said that while agriculture was a major economic base, it was no longer the main driving force of economic growth, as it has been superseded by the industry and service sectors.
According to a report from the Ministry of Planning and Investment, the industry sector saw rapid growth of 19 percent, accounting for 27.6 percent of GDP, while the service sector saw 6.3 percent growth, accounting for 38.7 percent of GDP. Agriculture and forestry saw 3 percent growth, accounting for 27.7 percent of GDP over the first six months of the 2010/2011 fiscal year.
Dr Liber said that while the floods had had only a minor impact on GDP growth, the population as a whole had suffered as the agriculture sector employs large numbers of people.
About 78 percent of the total population of 6.5 million people now work in agriculture, on the basis of self-sufficiency. The industry and service sectors employ only 5.8 percent and 20 percent respectively, despite seeing strong growth in recent years.
Dr Liber said the authorities should bolster cooperation to restore flooded areas, otherwise Laos will experience higher inflation due to food shortages. The inflation rate recently rose to about 6 percent, with rising food and fuel prices the main driving forces.
Road links between cities and rural areas are very important, he said, adding that road upgrades would help the government to ease inflation pressures.
vientiane times
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