Large infrastructure projects accelerate growth of Laos’ GDP: World Bank

Economists, government and non-governmental officials attend a video conference at the World Bank Laos Office in Vientiane yesterday.

LAO PDR (Vientiane Times) - The growth projection of Laos’ Gross Domestic Product (GDP) is forecasted to be 6.6 percent in 2019 and 6.7 percent by 2020, according to the latest update from the World Bank for East Asia and the Pacific. The key factor in the fast-track growth of the Lao economy is large infrastructure projects, Mongolia’s economy will also see strong growth for the same reason. Growth in developing East Asia and the Pacific (EAP) is projected to soften to 6.0 percent in 2019 and 2020, down from 6.3 percent in 2018, largely reflecting global headwinds and a continued gradual policyguided slowdown in China.

Still, the region’s economies have weathered the financial markets’ volatility of 2018 relatively well largely due to effective policy frameworks and strong fundamentals, including diversified economies, flexible exchange rates, and solid policy buffers. While trade policy uncertainty has abated somewhat, global trade growth is likely to moderate further, according to Managing Headwinds, the April 2019 edition of the World Bank East Asia and Pacific Economic Update released yesterday.

World Bank Acting Chief Economist for the East Asia and Pacific region, Mr Andrew Mason, said yesterday at the regional video conference in Bangkok, “While the economic outlook for EAP remains largely positive, it is important to recognise that the region continues to face heightened pressures that began in 2018 and that could still have an adverse impact.” Continued uncertainty stems from several factors, including further deceleration in advanced economies, the possibility of a faster-than-expected slowdown in China, and unresolved trade tensions. “These continuing headwinds will need to be actively managed,” Mr Mason said. Domestic demand has remained strong in much of the region, the report adds, partly offsetting the impact of slowing exports, the bank has forecasted.

The World Bank’s Vice President for East Asia and Pacific, Ms Victoria Kwakwa, said “The region’s resilient growth should bring about further poverty reduction, already at historic lows. By 2021, in fact, we expect extreme poverty to dip below 3 percent.” “At the same time, however, half a billion people in the region remain economically insecure, at risk of falling back into poverty — an important reminder of the scale of the challenges facing policymakers,” she said. China’s ongoing, policyguided slowdown will lead to 6.2 percent growth in 2019 and 2020, down from 6.6 percent in 2018. Growth in Indonesia and Malaysia is projected to remain unchanged in 2019, while growth rates in Thailand and Vietnam are expected to be slightly lower in 2019. In the Philippines, a delay in approving the 2019 national government budget is expected to weigh on GDP growth in 2019, but growth is anticipated to pick up in 2020. Country Manager of World Bank Laos Mr Nicola Pontara also attended the press conference for the East Asia and Pacific Economic Update via video conference from Bangkok.