Global slump hits Laos' coffers
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Laos is facing negative impacts from a slowdown of the European and US economies, Finance Minister Phouphet Khamphounvong said last week. Speaking at a meeting with the National Standing Members in Vientiane, the minister said the slowdown of the European
Over the first six months of the 2012/2013 fiscal year, the Ministry of Finance was able to collect revenue from domestic sources of only 7.36 trillion Laotian kip (about Bt30 billion), accounting for only 48 per cent of the annual plan. It also received 2.89 trillion kip in foreign aid from development partners, accounting to 62 per cent of the annual plan.
Phouphet said the main income sources for Laos came from the export of natural resources, including mining. However over the first six months of this fiscal year, the price of gold and copper, one of the major export commodities, dropped due to lower demand.
“The government was able to collect 1.072 trillion kip from the resource sector this year, dropping from 1.4 trillion kip the previous year,” he said, adding that the lower prices of export commodities are causing state revenues to decline.
The global economy, and the US and Europe in particular, have been sluggish due to the debt crisis over the past years, causing lower demand for the goods on the largest markets in the world.
However, according to a report from the Lao National Economic Research Institute, economists project that the world economy will see a minor increase this fiscal year, stirring hopes that the country will be able to collect more revenue over the upcoming years.
The growth in the world economy is expected to increase from 3.28 per cent in 2012 to 3.62 per cent in 2013, with many Lao trading partners reflecting that lift. Growth in the European Union is projected to increase from -0.21 per cent in 2012 to 0.49 per cent in 2013, the economists reported.
The economists forecast that despite the economic stagnation in Europe and the US, Asia will see strong economic growth. Asean countries like Singapore, the Philippines, Malaysia, Indonesia and Thailand will lift their growth rates from 5.42 per cent to 5.75 per cent, while America’s growth will fall from 2.17 per cent to 2.12 per cent.
Economists said that the global economic recovery would play a significant role in driving the Laotian economy, so the government can achieve its development targets.
