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Economy of Laos
 
 
 

General

The economy of Laos depends heavily on investment and trade with its neighbours, Thailand, Vietnam, and, especially in the north, China. Pakxe has also experienced growth based on cross-border trade with Thailand and Vietnam. In 2011, the Lao Securities Exchange began trading. In 2012, the government initiated the creation of the Laos Trade Portal, a website incorporating all information traders need to import and export goods into the country.

Subsistence agriculture still accounts for half of the GDP and provides 80% of employment. Only 4.01% of the country is arable land, and a mere 0.34% used as permanent crop land, the lowest percentage in the Greater Mekong Subregion. Rice dominates agriculture, with about 80% of the arable land area used for growing rice. Approximately 77% of Lao farm households are self-sufficient in rice.

Through the development, release and widespread adoption of improved rice varieties, and through economic reforms, production has increased by an annual rate of 5% between 1990 and 2005, and Lao PDR achieved a net balance of rice imports and exports for the first time in 1999. Lao PDR may have the greatest number of rice varieties in the Greater Mekong Subregion. Since 1995, the Lao government has been working with the International Rice Research Institute of the Philippines to collect seed samples of each of the thousands of rice varieties found in Laos.

The economy receives development aid from the IMF, ADB and other international sources; and also foreign direct investment for development of the society, industry, hydropower and mining (most notably of copper and gold). Economic development in Laos has been hampered by brain drain, with a skilled emigration rate of 37.4% in 2000.

Laos is rich in mineral resources and imports petroleum and gas. Metallurgy is an important industry, and the government hopes to attract foreign investment to develop the substantial deposits of coal, gold, bauxite, tin, copper and other valuable metals. In addition, the country's plentiful water resources and mountainous terrain enable it to produce and export large quantities of hydroelectric energy. Of the potential capacity of approximately 18,000 megawatts, around 8,000 megawatts have been committed for exporting to Thailand and Vietnam.

The country's most widely recognised product may well be Beerlao which is exported to a number of countries including neighbours Cambodia and Vietnam. It is produced by the Lao Brewery Company.

The tourism sector has grown rapidly, from 80,000 international visitors in 1990, to 1.876 million in 2010. Tourism is expected to contribute $679.1 million to gross national product in 2010, rising to $1,585.7 million by 2020. In 2010, one in every 10.9 jobs was in the tourism sector. Export earnings from international visitors and tourism goods are expected to generate 15.5% of total exports or $270.3 million in 2010, growing in nominal terms to $484.2 million (12.5% of total) in 2020.

Overview

Economy - overview:
The government of Laos, one of the few remaining one-party communist states, began decentralising 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 that began in 1997. Lao's growth exceeded 7% per year during 2008-11. Despite this high growth rate, Laos remains a country with an underdeveloped infrastructure, particularly in rural areas. It has a rudimentary, but improving, road system, and limited external and internal land-line telecommunications. Electricity is available in urban areas and in many rural districts. Subsistence agriculture, dominated by rice cultivation in lowland areas, accounts for about 30% of GDP and 75% of total employment. Economic growth has reduced official poverty rates from 46% in 1992 to 26% in 2010. The economy has benefited from high foreign investment in hydropower, mining and construction. Laos gained Normal Trade Relations status with the US in 2004, and is taking steps required to join the World Trade Organisation, such as reforming import licensing. Related trade policy reforms will improve the business environment. On the fiscal side, Laos initiated a VAT tax system in 2010. Simplified investment procedures and expanded bank credits for small farmers and small entrepreneurs will improve Lao''s economic prospects. The government appears committed to raising the country''s profile among investors, opening the country''s first stock exchange in 2011. The World Bank has declared that Laos''s goal of graduating from the UN Development Program''s list of least-developed countries by 2020 is achievable. According Laotian officials, the 7th Socio-Economic Development Plan for 2011-15 will outline efforts to achieve Millennium Development Goals.

GDP (purchasing power parity):
$17.66 billion (2011 est.)

GDP (official exchange rate):
$7.891 billion (2011 est.)

GDP - real growth rate:
8.3% (2011 est.)

GDP - per capita (PPP):
$2,700 (2011 est.)

GDP - composition by sector:
agriculture: 27.8%
industry: 34.8%
services: 37.4% (2011 est.)

Labour force:
3.69 million (2010 est.)

Labour force - by occupation
agriculture: 75.1%
industry and services: NA (2010 est.)

Unemployment rate:
2.5% (2009 est.)

Population below poverty line:
26% (2010 est.)

Household income or consumption by percentage share:
lowest 10%: 3.3%
highest 10%: 30.3% (2008)

Distribution of family income - Gini index:
36.7 (2008)

Budget:
revenues: $1.76 billion
expenditures: $1.957 billion (2011 est.)

Taxes and other revenues:
22.3% of GDP (2011 est.)

Budget surplus (+) or deficit (-):
-2.5% of GDP (2011 est.)

Inflation rate (consumer prices):
7.6% (2011 est.)

Central bank discount rate:
4.3% (31 December 2010)

Commercial bank prime lending rate:
22% (31 December 2011 est.)

Stock of narrow money:
$995.9 million (31 December 2011 est.)

Stock of broad money:
$3.25 billion (31 December 2011 est.)

Stock of domestic credit:
$2.547 billion (31 December 2011 est.)

Agriculture - products :
sweet potatoes, vegetables, corn, coffee, sugarcane, tobacco, cotton, tea, peanuts, rice; cassava (manioc), water buffalo, pigs, cattle, poultry

Industries:
mining (copper, tin, gold, and gypsum); timber, electric power, agricultural processing, rubber, construction, garments, cement, tourism

Industrial production growth rate:
17.7% (2010 est.)

Electricity - production:
1.553 billion kWh (2010 est.)

Electricity - consumption:
2.23 billion kWh (2010 est.)

Electricity - exports:
341 million kWh (2010 est.)

Electricity - imports:
999 million kWh (2010 est.)

Oil - production:
0 bbl/day (2010 est.)

Oil - consumption:
3,000 bbl/day (2010 est.)

Oil - exports:
0 bbl/day (2009 est.)

Oil - imports:
1,918 bbl/day (2010 est.)

Oil - proved reserves:
0 bbl (1 January 2011 est.)

Natural gas - production:
0 cu m (2009 est.)

Natural gas - consumption:
0 cu m (2009 est.)

Natural gas - exports:
0 cu m (2009 est.)

Natural gas - imports:
0 cu m (2009 est.)

Natural gas - proved reserves:
0 cu m (1 January 2011 est.)

Current account balance:
$96 million (2011 est.)

Exports:
$2.131 billion (2011 est.)

Exports - commodities:
wood products, coffee, electricity, tin, copper, gold

Exports - partners:
Thailand 34.8%, China 24.6%, Vietnam 10% (2011)

Imports:
$2.336 billion (2011 est.)

Imports - commodities:
machinery and equipment, vehicles, fuel, consumer goods

Imports - partners:
Thailand 65.9%, China 11.3%, Vietnam 5.3% (2011)

Reserves of foreign exchange and gold:
$773.5 million (31 December 2011 est.)

Debt - external:
$5.953 billion (31 December 2011 est.)

Exchange rates:
kips (LAK) per US dollar - 8,043.7 (2011 est.); 8,258.8 (2010 est.); 8,516.04 (2009); 8,760.69 (2008); 9,658 (2007)

Fiscal year:
1 October - 30 September

 

 
 

 



 


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