VIENTIANE, May 13 (Xinhua) -- Laos' economy is forecast to grow by 3.8 percent in 2022, a recent World Bank report said.
While sectors of the Lao economy are beginning to recover from the slowdown caused by COVID-19, the country faces stiff challenges associated with long-standing macroeconomic imbalances, according to the World Bank's latest economic update for Laos.
Laos' economy is forecast to grow by 3.8 percent in 2022, up from an estimated 2.5 percent in 2021, provided that ongoing debt renegotiations are successful and that strict COVID-19 containment measures do not return. The country currently enjoys a trade surplus and continues to attract foreign investment.
The energy and mining sectors have been buoyant, while agricultural and manufacturing exports are supported by strong external demand and higher commodity prices. A gradual recovery is also expected in domestic services, Lao News Agency (KPL) quoted the report as saying on Friday.
However, inflation reached 9.9 percent in the year to April 2022, up from under 2 percent last year, while long-term job losses and business closures caused by the spread of COVID-19 continue to put pressure on household incomes.
With prices rising faster than earnings, many low-income families are at risk of falling into poverty, especially in towns and cities, said the report.
It also looks at Laos' gradual transformation from a land-locked to a land-linked country through infrastructure development, and suggests reforms that could reduce the risks and maximize the benefits of the large investments being made in roads, rail and logistics parks.
These reforms include building connecting roads to ensure that farmers and businesses can access new infrastructure, making border crossings more efficient, and improving the business environment to attract investment and generate jobs.
Laos should also promote sectors where it has a comparative advantage, for example, in high-value added manufacturing goods, agricultural products, and nature-based tourism, said the report.
The World Bank publishes the Lao Economic Monitor twice a year.