Laos’ strong growth expected to continue

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LaosEconomyLaos’ impressive economic growth is set to continue booming for the next few years, according to a report released last month by the National Economic Research Institute (NERI) of Laos. Economic growth this year should reach 8.3 per cent if current government and foreign investment projects proceed as planned. The report also predicted that the economy will grow by 8.2 per cent in 2014 and 2015.

The NERI report discusses the negative impact of the recent global economic slowdown, which created negative conditions for Laos just like everywhere else. Nevertheless, Laos managed to achieve GDP growth of 8.29 per cent in 2012 and is showing no signs of slowing.

The composition of Laos’ economy is: Services (42.6 per cent), industry (20.2 per cent), and agriculture (37.4 per cent). In 2012, the agricultural sector grew by 2.8 per cent, the industrial sector by 14.4 per cent and the service sector by 8.1 per cent. Though services (including professional services, entertainment, retail, tourism, etc.) generate the most revenue and industry (including natural resources, manufacturing, etc.) is the largest growth sector, 85 per cent of Laotians are employed in the agricultural sector. Thus a major challenge for Laos will be to keep the services and industry sectors growing by providing the necessary education and training to move its people off the farms and into more profitable enterprises.

Much of the growth in industry in 2012 was due to a spate new mining operations. Mining production got a big boost from the opening of the Ban Houayxai gold and silver mine and the expansion of existing minerals projects. Copper output from the two largest producers, which together generate more than 90 per cent of total production, rose by 8 per cent, with gold production climbing by 61 per cent, and silver production up by 15 per cent.

The economy also got a boost from several major construction projects. Last year alone, the construction work included a $3.7 billion lignite thermal power project, seven new hydropower projects, and expanded facilities in the capital city, Vientiane, to handle a major international meeting and the Association of Southeast Asian Nations (ASEAN) University Games toward the end of 2012.

These trends are set to continue, according to the Asian Development Bank (ADB). In a recent report, the ABD wrote:

“Substantial investment flowing into hydropower and mining, coupled with the construction of hotels, offices, and housing, will drive GDP growth. In addition to the large Hongsa lignite power plant, which is about 40 per cent completed, work has started on the $3.5 billion Xayaburi dam and hydropower project, scheduled for commissioning in 2018 with capacity to generate 1.3 gigawatts of electricity. Five smaller hydropower projects are under development. Some new commercial-residential projects in the capital involve investments of several hundred million dollars, largely funded by foreign investment.”

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Reading Time: 2 minutes

Laos’ impressive economic growth is set to continue booming for the next few years, according to a report released last month by the National Economic Research Institute (NERI) of Laos. Economic growth this year should reach 8.3 per cent if current government and foreign investment projects proceed as planned. The report also predicted that the economy will grow by 8.2 per cent in 2014 and 2015.

Reading Time: 2 minutes

LaosEconomyLaos’ impressive economic growth is set to continue booming for the next few years, according to a report released last month by the National Economic Research Institute (NERI) of Laos. Economic growth this year should reach 8.3 per cent if current government and foreign investment projects proceed as planned. The report also predicted that the economy will grow by 8.2 per cent in 2014 and 2015.

The NERI report discusses the negative impact of the recent global economic slowdown, which created negative conditions for Laos just like everywhere else. Nevertheless, Laos managed to achieve GDP growth of 8.29 per cent in 2012 and is showing no signs of slowing.

The composition of Laos’ economy is: Services (42.6 per cent), industry (20.2 per cent), and agriculture (37.4 per cent). In 2012, the agricultural sector grew by 2.8 per cent, the industrial sector by 14.4 per cent and the service sector by 8.1 per cent. Though services (including professional services, entertainment, retail, tourism, etc.) generate the most revenue and industry (including natural resources, manufacturing, etc.) is the largest growth sector, 85 per cent of Laotians are employed in the agricultural sector. Thus a major challenge for Laos will be to keep the services and industry sectors growing by providing the necessary education and training to move its people off the farms and into more profitable enterprises.

Much of the growth in industry in 2012 was due to a spate new mining operations. Mining production got a big boost from the opening of the Ban Houayxai gold and silver mine and the expansion of existing minerals projects. Copper output from the two largest producers, which together generate more than 90 per cent of total production, rose by 8 per cent, with gold production climbing by 61 per cent, and silver production up by 15 per cent.

The economy also got a boost from several major construction projects. Last year alone, the construction work included a $3.7 billion lignite thermal power project, seven new hydropower projects, and expanded facilities in the capital city, Vientiane, to handle a major international meeting and the Association of Southeast Asian Nations (ASEAN) University Games toward the end of 2012.

These trends are set to continue, according to the Asian Development Bank (ADB). In a recent report, the ABD wrote:

“Substantial investment flowing into hydropower and mining, coupled with the construction of hotels, offices, and housing, will drive GDP growth. In addition to the large Hongsa lignite power plant, which is about 40 per cent completed, work has started on the $3.5 billion Xayaburi dam and hydropower project, scheduled for commissioning in 2018 with capacity to generate 1.3 gigawatts of electricity. Five smaller hydropower projects are under development. Some new commercial-residential projects in the capital involve investments of several hundred million dollars, largely funded by foreign investment.”

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