Vientiane (AsiaNews) – The Lao economy grew last year despite the global financial crisis at a rate of 6.4 per cent, the second highest in East Asia after China, this according to a World Bank report.
The report noted that one of the main reasons for this impressive growth is the Lao economy’s relative insulation from the global financial system and its low exposure to global trade.
Still, a sustained demand for Lao exports, including copper and gold bought by China, garment products by Europe and electricity by Thailand, combined with its strong tourism industry, which was boosted by higher public expenditures on domestic infrastructure for the 25th South-East Asian Games in Vientiane in December 2009, also helped cushion the country’s economy compared to other nations.
The mining sector alone, in particular copper and gold, contributed about 2.5 percentage points to growth in 2009, while manufacturing, construction and agriculture sectors each contributed 1 point to the growth.
However, not all is rosy. Economists warn the country has a number of challenges to meet to ensure growth is sustainable.
Metals processing industries and hydroelectric power plants led the impressive growth of the Lao economy; however, this is not sustainable in the long-term due to the unavoidable depletion of natural resources.
Experts are urging the government to shift the base of economic growth toward agricultural processing industries and services, including tourism.
Development of human resources and improvements to the investment mechanism to facilitate business operations should top the government’s agenda.
In fact Laos is still one of the region’s poorest countries with an estimated 27 per cent of the population living with less than $US 1 a day and 74.1% living on less than US$ 2 a day. Illiteracy remains widespread.
