2008年-世界发展银行全球_Lao_PDR_Economic_Monitor___November_2008_44页_1mb

Lao PDR Economic Monitor Summary

Core Content

The Lao PDR (Lao People's Democratic Republic) economy experienced strong growth in 2007, but this growth slowed in 2008 due to the global financial crisis. The economy is heavily reliant on natural resources, particularly hydropower and mining, which contributed around 2% to GDP growth in 2008. Non-resource sectors, such as agriculture, manufacturing, and services, also played a role, contributing nearly 5% to the overall growth.

Inflation, which had peaked at 10.3% in May 2008, dropped to 6.5% in October 2008, largely due to falling global oil and food prices. The country managed to bring inflation back to a single-digit level, and core inflation (excluding food and energy) remained low at around 4% over the past year. However, food and energy prices remained volatile, with food prices dropping significantly in recent months, especially for glutinous rice, while energy prices also fell sharply.

The Lao kip appreciated by about 2% against the US dollar and 11% against the Thai baht between May and October 2008. The country's external balance remained strong, with a surplus of about 4.8% of GDP in 2007 and similar expectations for 2008. The non-resource current account deficit stayed at a one-digit level, around 9% of GDP.

The government's fiscal performance was robust, with revenue collection slightly exceeding targets, reaching 14.9% of GDP in FY2007/08. The budget deficit remained below 3% of GDP, although it increased slightly to 3.0% in FY2007/08 compared to 2.7% in FY2006/07 due to emergency spending on flood mitigation and food and oil price stabilization.

External public and publicly guaranteed debt as a percentage of GDP remained high but showed a declining trend, dropping from 46% in 2007 to about 38% by end-2008. However, the debt-to-exports ratio and debt-to-revenue ratio were still above the indicative thresholds for low-income countries.

Key Views

• Economic Growth:

  • Real GDP growth slowed to 7% in 2008, expected to further decline to between 5% and 6% in 2009.
  • Growth is driven by completed hydropower projects, agro-processing, construction, and other services.
  • Future growth depends on the stability of the global financial crisis and its impact on the real economy.

• Inflation:

  • Inflation dropped from 10.3% in May 2008 to 6.5% in October 2008.
  • Core inflation remained around 4%, while food and energy prices were high and declined rapidly.
  • Food prices were sensitive to seasonality and supply shocks, such as flooding and Avian flu.

• Exchange Rates and External Balance:

  • The kip appreciated against major currencies, with a 2% increase against the US dollar and 11% against the Thai baht.
  • The current account deficit remained high at 17% of GDP in 2008, but non-resource current account deficit was at a one-digit level.
  • International reserves increased to about US$660 million by August 2008, but were expected to decline due to financial crisis impacts.

• Government Revenue:

  • Revenue collection grew, with a target of 14.9% of GDP achieved in FY2007/08.
  • Revenue from resources increased from 2.3% to 3.0% of GDP.
  • Fiscal deficit remained below 3% of GDP, but was expected to decline further.

• Foreign Investment:

  • FDI is expected to decline due to the global financial crisis and falling commodity prices.
  • Resource sector FDI accounts for over 80% of total FDI, and delays in major projects like hydropower and mining could significantly affect future investment and growth.

• Commodity Prices:

  • Global commodity prices fell sharply in 2008, with oil, copper, and other key exports projected to decline further in 2009.
  • These price declines will have a negative impact on fiscal revenues, especially mining and oil, which are major contributors to the government's income.

• Challenges:

  • The economy faces risks from reduced FDI, falling commodity prices, and potential private sector credit constraints.
  • The government's ability to implement fiscal stimulus may be limited due to declining revenues.

Key Information

• Population: 5.9 million in 2007.
• GNI (Atlas method): $3.4 billion in 2007.
• GNI per capita: $630 in 2007.
• GDP growth: 7.9% in 2007, expected to slow to 7% in 2008 and 5–6% in 2009.
• Inflation: Peaked at 10.3% in May 2008, dropped to 6.5% in October 2008.
• Exchange rate: Appreciated by about 2% against the US dollar and 11% against the Thai baht between May and October 2008.
• External public debt: 59.5% of GDP in 2007, expected to decline to 38% by end-2008.
• FDI: Expected to decline due to global financial turmoil and falling commodity prices.
• Commodity price projections:
  • Oil: -26% in 2009.
  • Copper: -32% in 2009.
  • Gold: -13% in 2009.
  • Rubber: -22% in 2009.
  • Maize: -27% in 2009.

Structural Reforms and Policy Measures

• Public Financial Management: Implementation of new Budget Law and centralization of Treasury, Customs, and Tax in three provinces.
• Trade Facilitation: Draft Trade Facilitation Master Plan expected to be finalized in early 2009.
• Private Sector Development: New enterprise registration system launched, but expansion to provinces is a challenge.
• Mining and Investment Laws: Expected to be submitted to the National Assembly for approval in December 2008.
• SME Development Strategy: First National SME Development Strategy approved in September 2008.
• Microfinance Regulation: New Regulation on Microfinance issued by BOL in June 2008.
• Banking and Investment Reforms: Ongoing drafting of implementing decrees for Banking Law and Secured Transaction Law.

Conclusion

The Lao PDR economy is facing significant challenges due to the global financial crisis, including reduced FDI, falling commodity prices, and potential liquidity issues. Despite these challenges, the government has managed to maintain macroeconomic stability, with inflation under control and fiscal performance robust. Continued structural reforms and improved management of resource and non-resource sectors are essential to support long-term growth and reduce vulnerability to global shocks.