| Date - Field | Laos - Economy - overview |
2009 January
Economy - overview | The government of Laos, one of the few remaining one-party Communist states, began decentralizing control and encouraging private enterprise in 1986. The results, starting from an extremely low base, were striking - growth averaged 6% per year from 1988-2008 except during the short-lived drop caused by the Asian financial crisis beginning in 1997. Despite this high growth rate, Laos remains a country with an underdeveloped infrastructure particularly in rural areas. It has no railroads, a rudimentary road system, and limited external and internal telecommunications, though the government is sponsoring major improvements in the road system with support from Japan and China. Electricity is available in urban areas and in most rural districts. Subsistence agriculture, dominated by rice, accounts for about 40% of GDP and provides 80% of total employment. The economy will continue to benefit from aid from international donors and from foreign investment in hydropower and mining. Construction will be another strong economic driver, especially as hydroelectric dam and road projects gain steam. Several policy changes since 2004 may help spur growth. Laos, which gained Normal Trade Relations status with the US in 2004, is taking steps to join the World Trade Organization. Related trade policy reforms will improve the business environment. On the fiscal side a value-added tax (VAT) regime, begun in late 2008, should help streamline the government's inefficient tax system. Meanwhile, economic prospects will improve gradually as the administration continues to simplify investment procedures and as a more competitive banking sector extends credit to small farmers and small entrepreneurs. The government appears committed to raising the country's profile among investors. An investment boom is occurring in mining and construction. Foreign donors have praised the Lao government for its efforts to improve the investment regime. The World Bank has declared that Laos' goal of graduating from the UN Development Program's list of least-developed countries by 2020 could be achievable. |
2008 January
Economy - overview | The government of Laos, one of the few remaining official Communist states, began decentralizing control and encouraging private enterprise in 1986. The results, starting from an extremely low base, were striking - growth averaged 6% per year in 1988-2007 except during the short-lived drop caused by the Asian financial crisis beginning in 1997. Despite this high growth rate, Laos remains a country with a primitive infrastructure. It has no railroads, a rudimentary road system, and limited external and internal telecommunications, though the government is sponsoring major improvements in the road system with possible support from Japan. Electricity is available in only a few urban areas. Subsistence agriculture, dominated by rice, accounts for about half of GDP and provides 80% of total employment. The economy will continue to benefit from aid by the IMF and other international sources and from new foreign investment in hydropower and mining. Construction will be another strong economic driver, especially as hydroelectric dam and road projects gain steam. Several policy changes since 2004 may help spur growth. In late 2004, Laos gained Normal Trade Relations status with the US, allowing Laos-based producers to benefit from lower tariffs on exports. Laos is taking steps to join the World Trade Organization in the next few years; the resulting trade policy reforms will improve the business environment. On the fiscal side, a value-added tax (VAT) regime, slated to begin in 2008, would streamline the government's inefficient tax system. |
2007 January
Economy - overview | The government of Laos, one of the few remaining official Communist states, began decentralizing control and encouraging private enterprise in 1986. The results, starting from an extremely low base, were striking - growth averaged 6% per year in 1988-2006 except during the short-lived drop caused by the Asian financial crisis beginning in 1997. Despite this high growth rate, Laos remains a country with a primitive infrastructure. It has no railroads, a rudimentary road system, and limited external and internal telecommunications, though the government is sponsoring major improvements in the road system with possible support from Japan. Electricity is available in only a few urban areas. Subsistence agriculture, dominated by rice, accounts for about half of GDP and provides 80% of total employment. The economy will continue to benefit from aid by the IMF and other international sources and from new foreign investment in hydropower and mining. Construction will be another strong economic driver, especially as hydroelectric dam and road projects gain steam. Several policy changes since 2004 may help spur growth. In late 2004, Laos gained Normal Trade Relations status with the US, allowing Laos-based producers to benefit from lower tariffs on exports. Laos is taking steps to join the World Trade Organization in the next few years; the resulting trade policy reforms will improve the business environment. On the fiscal side, a value-added tax (VAT) regime, slated to begin in 2008, will streamline the government's inefficient tax system. |
2006 January
Economy - overview | The government of Laos - one of the few remaining official Communist states - began decentralizing control and encouraging private enterprise in 1986. The results, starting from an extremely low base, were striking - growth averaged 6% in 1988-2004 except during the short-lived drop caused by the Asian financial crisis beginning in 1997. Despite this high growth rate, Laos remains a country with a primitive infrastructure; it has no railroads, a rudimentary road system, and limited external and internal telecommunications. The government has sponsored major improvements in the road system. Electricity is available in only a few urban areas. Subsistence agriculture accounts for half of GDP and provides 80% of total employment. The economy will continue to benefit from aid from the IMF and other international sources and from new foreign investment in food processing and mining. In late 2004, Laos gained Normal Trade Relations status with the US, allowing Laos-based producers to face lower tariffs on their exports; this may help spur growth. |
2005 January
Economy - overview | The government of Laos - one of the few remaining official Communist states - began decentralizing control and encouraging private enterprise in 1986. The results, starting from an extremely low base, were striking - growth averaged 6% in 1988-2004 except during the short-lived drop caused by the Asian financial crisis beginning in 1997. Despite this high growth rate, Laos remains a country with a primitive infrastructure; it has no railroads, a rudimentary road system, and limited external and internal telecommunications. The government has sponsored major improvements in the road system. Electricity is available in only a few urban areas. Subsistence agriculture accounts for half of GDP and provides 80% of total employment. The economy will continue to benefit from aid from the IMF and other international sources and from new foreign investment in food processing and mining. In late 2004, Laos gained Normal Trade Relations status with the US, allowing Laos-based producers to face lower tariffs on their exports; this may help spur growth. |
2004 January
Economy - overview | The government of Laos - one of the few remaining official Communist states - began decentralizing control and encouraging private enterprise in 1986. The results, starting from an extremely low base, were striking - growth averaged 7% in 1988-2001 except during the short-lived drop caused by the Asian financial crisis beginning in 1997. Despite this high growth rate, Laos remains a country with a primitive infrastructure; it has no railroads, a rudimentary road system, and limited external and internal telecommunications. Electricity is available in only a few urban areas. Subsistence agriculture accounts for half of GDP and provides 80% of total employment. The economy will continue to benefit from aid from the IMF and other international sources and from new foreign investment in food processing and mining. |
2003 January
Economy - overview | The government of Laos - one of the few remaining official Communist states - began decentralizing control and encouraging private enterprise in 1986. The results, starting from an extremely low base, were striking - growth averaged 7% in 1988-2001 except during the short-lived drop caused by the Asian financial crisis beginning in 1997. Despite this high growth rate, Laos remains a country with a primitive infrastructure; it has no railroads, a rudimentary road system, and limited external and internal telecommunications. Electricity is available in only a few urban areas. Subsistence agriculture accounts for half of GDP and provides 80% of total employment. The economy will continue to benefit from aid from the IMF and other international sources and from new foreign investment in food processing and mining. |
2002 January
Economy - overview | The government of Laos - one of the few remaining official Communist states - began decentralizing control and encouraging private enterprise in 1986. The results, starting from an extremely low base, were striking - growth averaged 7% in 1988-2001 except during the short-lived drop caused by the Asian financial crisis beginning in 1997. Despite this high growth rate, Laos remains a country with a primitive infrastructure; it has no railroads, a rudimentary road system, and limited external and internal telecommunications. Electricity is available in only a few urban areas. Subsistence agriculture accounts for half of GDP and provides 80% of total employment. The economy will continue to benefit from aid from the IMF and other international sources and from new foreign investment in food-processing and mining. |
2001 January
Economy - overview | The government of Laos - one of the few remaining official communist states - began decentralizing control and encouraging private enterprise in 1986. The results, starting from an extremely low base, were striking - growth averaged 7% during 1988-97. Reform efforts subsequently slowed, and GDP growth dropped an average of 3 percentage points. Because Laos depends heavily on its trade with Thailand, it was damaged by the regional financial crisis beginning in 1997. Government mismanagement deepened the crisis, and from June 1997 to June 1999 the Lao kip lost 87% of its value. Laos' foreign exchange problems peaked in September 1999 when the kip fell from 3,500 kip to the dollar to 9,000 kip to the dollar in a matter of weeks. Now that the currency has stabilized, however, the government seems content to let the current situation persist, despite limited government revenue and foreign exchange reserves. A landlocked country with a primitive infrastructure, Laos has no railroads, a rudimentary road system, and limited external and internal telecommunications. Electricity is available in only a few urban areas. Subsistence agriculture accounts for half of GDP and provides 80% of total employment. For the foreseeable future the economy will continue to depend on aid from the IMF and other international sources; Japan is currently the largest bilateral aid donor; aid from the former USSR/Eastern Europe has been cut sharply. |
2000 January
Economy - overview | The government of Laos - one of the few remaining official communist states - began decentralizing control and encouraging private enterprise in 1986. The results, starting from an extremely low base, were striking - growth averaged 7% in 1988-96. Since mid-1996, however, reform efforts have slowed, and the economy has suffered as a result. Because Laos depends heavily on its trade with Thailand, it was further damaged by the regional financial crisis beginning in 1997. From June 1997 to June 1999 the Lao kip lost 87%, and reached a crisis point in September 1999 when it fluctuated wildly, falling from 3,500 kip to the dollar to 9,000 kip to the dollar in a matter of weeks. Now that the currency has stabilized, however, the government seems content to let the current situation persist, despite 140% inflation in 1999 and limited foreign exchange reserves. A landlocked country with a primitive infrastructure, Laos has no railroads, a rudimentary road system, and limited external and internal telecommunications. Electricity is available in only a few urban areas. Subsistence agriculture accounts for half of GDP and provides 80% of total employment. For the foreseeable future the economy will continue to depend on aid from the IMF and other international sources; Japan is currently the largest bilateral aid donor; aid from the former USSR/Eastern Europe has been cut sharply. As in many developing countries, deforestation and soil erosion will hamper efforts to attain a high rate of GDP growth. |
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This page was last updated on 23 June, 2009 |
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