December 21, 2012
Laos’ economic growth is expected to remain strong this year with construction, manufacturing, mining and services as the main driving forces, according to a report from the World Bank.
The bank released the East Asia and Pacific Economic Update this week, which projects that the Lao economy will see growth of 8.2 percent in 2012.
This is slightly lower than the projection of 8.3 percent in May because of a projected fall in garment exports this year. Nevertheless, growth will remain strong at above 8 percent for the third consecutive year, according to the report posted on the bank’s website on Wednesday.
One key driver on the demand side is the surge in investment this year in infrastructure and housing, along with the preparations for the 9th Asia-Europe Meeting Summit held in Vientiane last month. On the supply side, this development has a positive spillover to manufacturing sectors through demand for cement and construction materials. In addition, food and beverages benefit from boosted domestic demand.
Upgraded and new mining projects offer a higher contribution to growth compared to last year as shown in the positive performance in the past three quarters. Additionally, the service sector will benefit from higher trading, tourism, transport, and telecommunications, while agriculture will recover from the impact of last year’s floods.
According to the bank, the Lao economy will see 7.5 percent growth next year.
The World Bank’s latest economic projection also shows the economy of the East Asia and Pacific region will grow at 7.5 percent in 2012, lower than the 8.3 percent registered in 2011, but set to recover to 7.9 percent in 2013.
China’s growth is projected to reach 7.9 percent this year, 1.4 percentage points lower than last year’s 9.3 percent and the lowest growth rate since 1999.
“The East Asia and Pacific region is becoming increasingly important for the world economy, and is expected to contribute almost 40 percent of global growth in 2012,” said World Bank Chief Economist for East Asia and Pacific, Bert Hofman.
“With high growth rates sustained in the region, we expect poverty to continue to decline. The share of people living under US$2 a day in the region is forecast to reach 23.3 percent by the end of 2014, down significantly from 28.8 percent in 2010.”
Developing East Asia, excluding China, is projected to grow 5.6 percent in 2012, up from 4.4 percent in 2011. The rebound in Thailand following the floods in 2011, strong growth in the Philippines, and relatively mild slowdowns in Indonesia and Vietnam contributed to this recovery. Continuing strong performances by Indonesia, Malaysia, and the Philippines will boost Developing East Asia, excluding China, to 5.7 percent in 2013 and 5.8 percent in 2014.
Another bright spot in the region is Myanmar’s reengagement with the international community. The Myanmar economy continued to accelerate in fiscal year 2011-12, with GDP growth at 5.5 percent, and expected to reach 6.3 percent in fiscal year 2012-13.