Laos economic growth forecasted at 4.2% and 4.5% for 2023 and 2024
Strong growth in the service sector remains a key factor in driving economic growth in 2023 and 2024, which is projected at 4.2 and 4.5 % respectively, the government told the National Assembly (NA) on Tuesday.
Minister of Planning and Investment Khamjane Vongphosy cited the figures when reporting on the implementation of the 2023 socio-economic development plan and the draft plan for 2024, which he presented at the ongoing 6th ordinary session of the NA’s 9th legislature for consideration and approval.
However, the projected 4.2 % growth rate is lower than the target of 4.5 % set in the 2023 plan, the minister said.
Rising production costs and drought which affected hydroelectricity generation were key factors in this year’s lower growth rate.
Laos recorded gross domestic product (GDP) growth of 4.4 % over the first nine months of this year.
Wholesale and retail, transport and tourism-related hospitality businesses, collectively categorised as the service sector, were the best performers. This sector grew by 5.6 %, the highest contributor to GDP with 37.2 %. Tax and customs, industry, and agriculture and forestry grew 3.9, 3.5 and 3.4 % respectively.
The minister underlined the need to maintain strong political stability and social order to ensure the success of upcoming major events to be hosted by Laos and to drive the service sector and achieve 2024’s ambitious growth targets.
Next year, Laos will assume the presidency of the Association of Southeast Asian Nations (Asean) during which numerous summits and related meetings will be held in Vientiane. The Asean Tourism Forum is scheduled to take place in January, while the Visit Laos Year 2024 tourism promotion campaign will be rolled out.
In 2024, the industry is expected to record the highest growth rate at 5 %, followed by the service sector at 4.8 %, tax and customs at 3.9 %, and agriculture at 2.6 %.
If these targets are achieved, GDP will amount to 293,786 billion kips, equivalent to an average per capita annual income of US$1,787.
Addressing the NA on the same day, Prime Minister Sonexay Siphandone pledged to continue to enforce promulgated measures to stabilise the macroeconomy amid ongoing challenges.
The premier said the government will strive to prevent Laos from falling into crisis and debt default.
The government has announced an ambitious target to drag down inflation to a single-digit figure next year after months of excessive levels. Inflation is currently trending downwards from the 41.26 % figure recorded in February to 25.69 % in September.
Other key targets set in the draft 2024 socio-economic development plan include:
- Total revenue of 49,737 billion kips, accounting for 16.93 % of GDP, up 29 % from the 2023 plan,
- Total expenditure of 58,294 billion kips, accounting for 19.84 % of GDP,
- M2 not to exceed 25 % compared to 2023,
- Foreign reserves to ensure imports for at least five months,
Non-performing loans issued by commercial banks not to exceed 3 % of total credit provided,
- Export earnings paid through the banking system reach at least 60 % of total export earnings,
- Export value exceeds US$8.7 billion, up by 6.07 % compared to 2023,
- Import value exceeds US$7.2 billion, up by 2.62 % compared to 2023,
Total investment reaches 56,534 billion kips (19.24% of GDP), including 32,435 billion kips from local and foreign private sectors.