Lao growth ‘bright in medium term’
A WORLD BANK economist team has projected that economic growth in Laos will start to recover from 2019 onwards after major hydropower plants begin commercial operation this year.
The team, led by senior country economist Mr Evgenij Najdov, made this projection in the December edition of the Lao PDR Economic Monitor, posted on the official website of the bank.
“Growth (of the Lao economy) in 2018 is projected to further ease at 6.6 percent before picking up slightly in 2019-2020,” the economists were quoted as saying in the report titled “Lowering risks, reviving growth”.
According to these economists, the factors that will cause a decline in economic growth this year include the government’s austerity measures. Limited growth in the natural resources sector will also contribute to the decline.
But despite economic struggles and challenges in 2018, economists say there is still an opportunity for Laos to resume its strong economic growth in the medium term.
This resumption in growth will be possible because a number of major electricity generation plants, which are now under construction, are scheduled to start commercial operation from 2019, they said.
They predict that the power sector will continue to expand with the installed capacity expected to reach about 11,000MW by 2021.
Among the large hydropower projects expected to come on stream and commence commercial operation in 2019 are the 410MW Xepian-Xenamnoi plant, the 270MW Nam Ngiep 1 plant, and the 1,287MW Xayaboury plant.
The economists said the integration of Laos into the regional and global economy will also boost investment and productivity in agriculture, tourism, manufacturing, and trade.
The growth in these non-resource sectors will generate jobs and incomes for Lao people.
The economists said the mining sector’s contribution to the economy is expected to gradually decline as the current investments mature while the moratorium currently in place limits investments in new deposits.
Sepon, one of the largest copper mines in the central province of Savannakhet, is scheduled to shut down in 2020 when copper ore is depleted.
Another economic challenge facing Laos is that the recent government decision to limit land allocation for agricultural plantations could create a barrier to the commercialisation of production and increase in exports.
The government is now working to improve the business climate to make Laos an attractive investment destination.