Laos Economy Profile 2008

Economy - overview

The government of Laos, one of the few remaining one-party Communist states, began decentralizing control and encouraging private enterprise in 1986. The results, starting from an extremely low base, were striking - growth averaged 6% per year in 1988-2007 except during the short-lived drop caused by the Asian financial crisis beginning in 1997. Despite this high growth rate, Laos remains a country with a underdeveloped infrastructure, particularly in rural areas. It has no railroads, a rudimentary road system, and limited external and internal telecommunications, though the government is sponsoring major improvements in the road system with support from Japan and China. Electricity is available in urban areas and in most rural districts. Subsistence agriculture, dominated by rice, accounts for about 40% of GDP and provides 80% of total employment. The economy will continue to benefit from aid from international donors and from foreign investment in hydropower and mining. Construction will be another strong economic driver, especially as hydroelectric dam and road projects gain steam. Several policy changes since 2004 may help spur growth. In late 2004, Laos gained Normal Trade Relations status with the US, allowing Laos-based producers to benefit from lower tariffs on exports. Laos is taking steps to join the World Trade Organization in the next few years; the resulting trade policy reforms will improve the business environment. On the fiscal side, a value-added tax (VAT) regime, slated to begin in 2008, should help streamline the government's inefficient tax system.

GDP (purchasing power parity)

$12.61 billion (2007 est.)

GDP (official exchange rate)

$4.008 billion (2007 est.)

GDP - real growth rate

7% (2007 est.)

GDP - per capita (PPP)

$1,900 (2007 est.)

GDP - composition by sector

agriculture: 41.2%
industry: 32.5%
services: 26.3% (2007 est.)

Population below poverty line

30.7% (2005 est.)

Household income or consumption by percentage share

lowest 10%: 3.4%
highest 10%: 28.5% (2002)

Inflation rate (consumer prices)

5% (2007 est.)

Labor force

2.1 million (2006 est.)

Labor force - by occupation

agriculture: 80%
industry and services: 20% (2005 est.)

Unemployment rate

2.4% (2005 est.)

Distribution of family income - Gini index

34.6 (2002)

Budget

revenues: $470.4 million
expenditures: $643.5 million (2007 est.)

Industries

copper, tin, gold, and gypsum mining; timber, electric power, agricultural processing, construction, garments, tourism, cement

Industrial production growth rate

12% (2007 est.)

Electricity - production

1.715 billion kWh (2005)

Electricity - consumption

1.193 billion kWh (2005)

Electricity - exports

728 million kWh (2005)

Electricity - imports

326 million kWh (2005)

Oil - production

0 bbl/day (2005 est.)

Oil - consumption

2,950 bbl/day (2005 est.)

Oil - imports

2,898 bbl/day (2004)

Oil - exports

0 bbl/day (2004)

Oil - proved reserves

0 bbl (1 January 2006 est.)

Natural gas - production

0 cu m (2005 est.)

Natural gas - consumption

0 cu m (2005 est.)

Natural gas - exports

0 cu m (2005 est.)

Natural gas - imports

0 cu m (2005)

Natural gas - proved reserves

0 cu m (1 January 2006 est.)

Current Account Balance

-$355 million (2007 est.)

Agriculture - products

sweet potatoes, vegetables, corn, coffee, sugarcane, tobacco, cotton, tea, peanuts, rice; water buffalo, pigs, cattle, poultry

Exports

$720.9 million (2007 est.)

Exports - commodities

wood products, coffee, electricity, tin, copper, gold

Exports - partners

Thailand 42.1%, Vietnam 9.5%, China 4% (2006)

Imports

$1.199 billion f.o.b. (2007 est.)

Imports - commodities

machinery and equipment, vehicles, fuel, consumer goods

Imports - partners

Thailand 68.8%, China 11.3%, Vietnam 5.6% (2006)

Reserves of foreign exchange and gold

$513.5 million (31 December 2007 est.)

Debt - external

$3.179 billion (2006)

Economic aid - recipient

$379 million (2006 est.)

Currency (code)

kip (LAK)

Exchange rates

kips per US dollar - 9,658 (2007), 10,235 (2006), 10,820 (2005), 10,585.5 (2004), 10,569 (2003)

Fiscal year

1 October - 30 September