Lao PDR
Briefing Notes for the Launch in Vientiane, March 2009
Economic growth
- Economic growth decreased slightly in Lao PDR from 7.9% in 2007 to 7.5% in 2008.
- High commodity prices during the first half of 2008 helped the country sustain economic growth at a level only slightly below that of 2007.
- A sharp slowdown in economic growth of the main trading partners of Lao PDR, such as Thailand, will have an adverse impact on the country’s exports.
- The global credit crunch may affect funding for foreign direct investment, slowing down construction of major hydroelectricity projects under way.
- As of the end of February, GDP growth was forecast to drop to 5% in 2009, the lowest since 1998.
Inflation
- Reflecting dramatic volatility in international commodity markets, Lao PDR’s inflation rate increased from an average of 4.5% in 2007 to 8% in 2008, but it is forecast to drop to 4.9% in 2009.
Fiscal situation and perspectives
- The high concentration of exports on primary commodities exposes the economy to significant declines in copper prices (over 50% since July 2008), adversely affecting tax revenues from the mining sector.
