Lao PDR Economic Monitor, January 2019 : Macroeconomic Stability Amidst Uncertainty
Although decelerating from 6.9 percent the previous year, economic growth in 2018 is estimated to remain robust at 6.5 percent. The slowdown in growth in 2018 has been partly due to a combination of the following domestic factors : (i) the severe f...
| Main Author: | |
|---|---|
| Format: | Report |
| Language: | English |
| Published: |
World Bank, Vientiane
2019
|
| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/818841549314902040/Lao-PDR-Economic-Monitor-Macroeconomic-Stability-Amidst-Uncertainty http://hdl.handle.net/10986/31243 |
| Summary: | Although decelerating from 6.9 percent
the previous year, economic growth in 2018 is estimated to
remain robust at 6.5 percent. The slowdown in growth in 2018
has been partly due to a combination of the following
domestic factors : (i) the severe floods that hit the
country during July – September 2018, which adversely
affected agricultural production and damaged infrastructure
in several provinces; (ii) the weak performance of the
mining sector despite higher commodity prices; and (iii)
continued fiscal consolidation, which contributed to slower
credit growth. These downside factors offset the gains from
the industry sector driven by the expansion of construction
activities and electricity exports, coupled with robust
growth in wholesale and retail trade. There is evidence of
increasing job creation between 2010 and 2017. According to
the 2017 Labor Force Survey, wage jobs are estimated to have
gradually increased since 2010. This has resulted in 28
percent of households situated mostly in urban areas
reporting an increase in income. As a result, ownership of
consumption goods among the more affluent households
increased faster than in poorer, mainly rural, households.
Therefore, while poverty is still expected to decline
modestly, inequality is likely to have increased. The
government intends to remain on the path of fiscal
consolidation, with the deficit estimated to decrease to 4.7
percent of GDP in 2018 from 5.3 percent in 2017, owing to
some improvement in revenue collection and expenditure
restraint. Improved revenue performance has been primarily
driven by higher excise revenues due to increasing oil
imports coupled with a higher price of oil. Other drivers
include an increase in income taxes, dividend earnings, and
other non-tax revenues. Strengthened revenue administration,
such as the use of electronic tax payment platforms, has
also supported revenue mobilization for certain tax types.
Public outlays have been rationalized through tighter
control of the public wage bill and downward adjustment of
non-wage current spending. These measures offset higher
interest payments and the increase in capital spending
financed by external loans. Fiscal consolidation is
estimated to have slowed the accumulation of public debt in
2018, though not enough to reverse the rising debt-GDP
ratio, which is estimated to increase from 60.1 to 60.6
percent of GDP between 2017 and 2018. |
|---|