Laos economy set for impressive recovery

2 min read

As the global economy continues to recover from the COVID-19 pandemic, Laos is poised to see a moderate economic growth this year and the next, according to a recent report by the Asian Development Bank (ADB). This is welcome news for the lower-middle income developing economy, which has been facing economic challenges in recent years.

Economic model

Laos’ economic model resembles that of China and Vietnam, combining high degrees of state ownership with an openness to foreign direct investment and private ownership in a predominantly market-based framework.

The country has benefited from direct foreign investment, particularly in the natural resource and industry sectors, and the construction of large hydropower dams and expanding mining activities have also boosted the economy.


However, Laos has faced some economic challenges, such as a trade deficit of USD 48 million in February 2023 and households cutting spending on education to counter rampant inflation. The country has also established a Soviet-type planned economy after independence, which has led to some inefficiencies.

Expected growth

Despite these challenges, the ADB report suggests that Laos’ economy is expected to grow moderately this year and the next, thanks to the recovery in services and private sector investments as pandemic restrictions eased throughout the region. The China-Laos railway, which began operations in December 2021, has also seen increasing demand for its services, which is expected to contribute to the country’s economic recovery.

Laos’ membership in ASEAN and the WTO also provides opportunities for the country to benefit from regional and global economic integration. The government’s efforts to decentralize control and encourage private enterprise are also positive steps towards creating a more market-oriented economy.

While Laos faces some economic challenges, the country is poised for moderate economic growth in the coming years.

The government’s efforts to decentralize control, encourage private enterprise, and attract foreign investment will be crucial to sustaining this growth and improving the standard of living for its citizens.

Aaron Chan

Aaron Chan is a seasoned journalist who serves as Asia's correspondent for GE63. With a wealth of experience in the region, Chan has a keen eye for the latest developments and trends in Asia's dynamic and rapidly evolving economies. His reporting offers valuable insights into the economic, social, and political changes that are shaping the future of the region.

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