Economic growth exceeds revised expectations

Vientiane Times, 05 Nov 2009

The growth of the Lao economy in the 2008-09 fiscal year has exceeded
previously-revised government expectations, according to a senior
economist.

Lao National Economic Research Institute Deputy Director General, Dr
Liber Libuapao, made the comment yesterday after the government this
week revealed economic growth of 7.6 percent for the last fiscal year.

In July, the government proposed the National Assembly lower the
economic growth forecast from 8 to 7.5 percent to take into account
the effects of the global financial crisis and subsequent economic
slowdown.

Dr Liber said the Lao economy strengthened towards the end of the
fiscal year due to active efforts by the government to mitigate
negative economic impacts.

He said the government had introduced a number of measures and
incentives to make the investment process easier, one of the main
factors in boosting economic growth.

A number of state commercial banks reduced loan interest rates from 12
to 10 percent per annum for loans in Lao kip, and from 8 to 6 percent
per year for US dollar loans, hoping to encourage more business
investment.

Dr Liber said one of the main reasons economic growth was higher than
expected was due to the recovery of the regional and global economy.

The value of Lao exports recovered faster than the government
expected.

“Earlier, we thought prices of major export commodities such as copper
would stay low but this has not been the case,” he said.

Instead, the price of such commodities had increased markedly.

According to mining industry sources, the price of copper was close to
US$2,500 per tonne at the end of 2008, but is now more than US$5,000
per tonne.

Dr Liber also said some investment projects which had been suspended
at the end of 2008 have resumed after investors regained confidence
and secured funding.

Commodity price increases have also boosted financial institutions'
willingness to fund such investments. The end result would be more
jobs and income, he said.

Dr Liber said the main driver of the Lao economy in 2009-10 would
remain the hydroelectric power and mining sectors which were both
seeing increased investment.

The tourism industry will also play a part, despite many believing the
sector will continue to face fallout from the uncertain economic
situation overseas.

According to a report from the Lao National Tourism Administration,
the number of tourist arrivals is increasing overall.

Arrivals from Thailand and China are on the rise, but visitor numbers
from Europe and the USA have dropped due to the economic recession.

However, investment in the tourism sector, including construction of
hotels in Vientiane , has seen a major increase as investors seek to
capitalise on a visitor boost during the SEA Games in December, and
beyond.