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ADB predicts 7.9% economic growth for Laos

Publication Date : 03-10-2012


The Asian Development Bank (ADB) has forecast that economic growth in Laos will remain strong this fiscal year, with electricity and mining still the main drivers of growth.

According to the Asian Development Outlook 2012 Update, which the bank plans to unveil to the Lao media in Vientiane today, economic growth will see a 7.9 per cent increase in 2012/2013 compared to the previous year.

The bank's annual publication highlights the electricity and mining sectors as the main contributors to this strong growth rate.

The publication notes that Laos is in the process of constructing a number of electricity generating plants, including the 1,800MW lignite power plant in Hongsa district, Xayaboury province, and the 440MW Nam Ngum 3 hydro plant in Vientiane province. The Theun Hinboun hydropower expansion project in Khammuan province will begin generating electricity at the end of this year.

The construction of power plants will help to create more job opportunities for the Lao people, while the commercial operation of these plants will generate significant amounts of revenue for the country, helping to further boost economic growth.

In the mining sector, Phu Bia Mining's Ban Houayxai mine has been operational since May. It is expected the mine will produce 100,000 ounces of gold a year and 700,000 ounces of silver annually year.

The Australian miner is now expanding its Phu Kham copper and gold project, which will also help to boost the output of mining products.

A US$94 million potash mine is also under construction, with completion set for the end of this year. In addition, a potash processing plant, which will produce fertiliser for export, is expected to become operational in 2015.

ADB says one of the major driving forces of economic growth in Laos is government investment in the construction of facilities to host the Asia-Europe Meeting Summit and related meetings, which are scheduled to take place in Vientiane this month and next.

Tourism is also expected to benefit from international promotion of Visit Laos Year 2012, the Asean University Games in December, and the greater number of flights offered by Lao Airlines since it acquired new Airbus aircraft.

Rice yields are expected to recover after a poor harvest last year due to widespread flooding. The government has approved significant funding to repair and build irrigation systems to boost crop yields this dry season.

ADB says Laos' fiscal deficit is expected to remain at 4.6 per cent of GDP (gross domestic product) while the Bank of the Lao PDR will keep money growth below 25 per cent to rein in credit growth. The inflation rate is expected to be 6 per cent next year.

Lower fuel prices and improved agricultural output will ease pressure on food price management, though consumers will bear the brunt of the government's decision to raise the price of electricity.


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