2011年-世界发展银行全球_Lao_PDR_Economic_Monitor_May_2011___Robust_Growth_amidst_Inflationary_Concerns_28页_3mb

Lao PDR Economic Monitor - May 2011 Update

Core Content Summary

Lao PDR is expected to maintain robust economic growth in 2011, with a projected real GDP growth rate of 8.6%, slightly higher than the 8.4% recorded in 2010. Growth will be driven primarily by the natural resource and manufacturing sectors. The garment export industry is anticipated to grow by 15-20% due to the EU relaxing raw material sourcing requirements and increased orders from key producers. The service sector, particularly transport, tourism, and retail, also shows signs of improvement. Agriculture is expected to benefit from rising regional demand and higher food prices.

Key Economic Indicators

GDP Growth by Sector

• Resource sectors: 3.6 percentage points (mainly electricity and mining)
• Manufacturing: 1 percentage point
• Agriculture: 1 percentage point
• Construction: 0.5 percentage points
• Services: 2.5 percentage points

Inflation Trends

• Headline inflation (CPI): Increased to 7.7% in March 2011 from 5.8% in December 2010, driven by rising fuel and nonfood prices
• Food inflation: Declined from 14.2% in September 2010 to 7.2% in March 2011 due to government measures such as increasing local food supply, stable exchange rate policy, and a temporary ban on rice exports
• Core inflation: Rose from 2.6% to 7.5% in the same period
• Annualized inflation: About 6% in 2010, projected at 7% in 2011

Government Revenue and Expenditure

• Budget deficit: Expected to drop to 2.8% of GDP in FY10/11 from 5.7% in FY09/10, due to slower expenditure growth and higher resource tax revenues
• Domestic revenue: Projected to increase to 14.4% of GDP in FY10/11 from 13.3% in FY09/10, with resource sectors contributing significantly
• Resource revenue to GDP ratio: Projected to rise to 4.1% in FY10/11 from 2% in FY09/10
• Non-resource revenue to GDP ratio: Likely to fall from 11.9% to 11.3% due to slower growth in non-resource revenue
• Overall spending: Expected to decline to 21.1% of GDP in FY10/11 from 22.3% in FY09/10, due to reduced quasi-fiscal spending and lower recurrent spending
• Wage bill: Expected to remain stable
• Compensations and transfers: Projected to increase to support public services in remote areas

External Balance

• Exports: Projected to grow by nearly 30% in 2011, driven by higher commodity prices and strong regional demand, particularly in electricity and copper
• Import growth: Expected to rise by 22% in 2011 due to increased capital and consumption goods imports and higher petrol prices
• Trade deficit: Narrowed from $1,033 million in 2008 to $602 million in 2010 and is projected to decline further to $492 million in 2011
• Current account deficit: Projected to widen to 9.4% of GDP in 2011 from 8.6% in 2010 due to increased net income transfers and debt service payments abroad
• Resource current account surplus: Expected to fall to 4.8% of GDP from 5.5% in 2010
• Non-resource current account deficit: Projected to increase to $1,237 million in 2011 from $1,056 million in 2010
• Capital account surplus: Expected to rise to 12.1% of GDP in 2011 from 9.9% in 2010, driven by new investments in resource mega projects such as the Hongsa Lignite Power Plant and Phubia Mining's gold production expansion

Currency and Monetary Sector

• Lao kip: Appreciated slightly against the US dollar (0.2%) and depreciated against the Thai baht (2.3%) during February-March 2011
• Overall appreciation against USD: 0.9% over the last six months (October 2010 - March 2011)
• Credit growth: Slowed to 46% y-o-y in December 2010 from 91% in December 2009, due to reduced lending to SOEs and the private sector
• Broad money (M2): Grew by 39.1% in 2010 and is expected to continue growing in 2011, driven by strong GDP growth and high deposits
• Dedollarisation rate: Increased to 46.2% in 2010 from 42.2% in 2009, reflecting growing confidence in the kip

Structural Reforms and Policy Developments

• Treasury reform: Progress continues with consolidation of spending units into the National Treasury and the introduction of zero-balance accounts
• Public investment management: A new mechanism has been implemented with allocation norms for the capital budget, favoring poorer provinces
• Trade reform: A Prime Minister's decree on import and export of goods is expected to be signed soon, introducing "national treatment" and "most favored nation" principles into Lao law, which is a final requirement for WTO accession
• Private sector development: Ongoing efforts to improve the business environment and support private sector growth

Key Challenges

• Food price volatility: Despite recent declines, food prices remain vulnerable to natural disasters, animal diseases, and seasonal factors
• Inflationary pressures: Rising energy and nonfood prices continue to exert upward pressure on CPI inflation
• Non-resource trade deficit: Expected to widen to $1,716 million in 2011, or 19.5% of GDP
• Implementation of price controls: Uncertain how effective they will be at the provincial and district levels

Conclusion

Lao PDR's economy is showing resilience with robust growth and efforts to manage inflation and fiscal sustainability. The country's reliance on natural resources continues to shape its economic performance and external balance. Structural reforms and policy initiatives are aimed at improving governance, public investment efficiency, and trade integration. The outlook remains positive, with continued growth expected in the medium term, although challenges related to inflation, trade deficits, and food price stability persist.