Laos Economy Profile 2009

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 from 1988-2008 except during the short-lived drop caused by the Asian financial crisis that began in 1997. Despite this high growth rate, Laos remains a country with an 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 many rural districts. Subsistence agriculture, dominated by rice, accounts for about 40% of GDP and provides 80% of total employment. The government depends upon aid from international donors for over 80% of its capital investment. The economy has until recently benefited from high foreign investment in hydropower, mining, and construction. The fiscal crisis of late 2008, and the rapid drop in commodity prices - especially copper - has slowed these investments. Several policy changes since 2004 may help spur growth. Laos, which gained Normal Trade Relations status with the US in 2004, is taking steps to join the World Trade Organization. Related trade policy reforms will improve the business environment. On the fiscal side, a value-added tax (VAT) regime, which began with a few large businesses in early 2009, should slowly help streamline the government's inefficient tax system. Economic prospects will improve gradually as the administration continues to simplify investment procedures and as a more competitive banking sector extends credit to small farmers and small entrepreneurs. The government appears committed to raising the country's profile among investors. Foreign donors have praised the Lao government for its efforts to improve the investment regime. The World Bank has declared that Laos' goal of graduating from the UN Development Program's list of least-developed countries by 2020 could be achievable.

GDP (purchasing power parity)

$13.98 billion (2008 est.)
$13.01 billion (2007 est.)
$12.1 billion (2006 est.)
note: data are in 2008 US dollars

GDP (official exchange rate)

$5.26 billion (2008 est.)

GDP - real growth rate

7.5% (2008 est.)
7.5% (2007 est.)
8.3% (2006 est.)

GDP - per capita (PPP)

$2,100 (2008 est.)
$2,000 (2007 est.)
$1,900 (2006 est.)
note: data are in 2008 US dollars

GDP - composition by sector

agriculture: 39.2%
industry: 34.3%
services: 26.5% (2008 est.)

Population below poverty line

30.7% (2005 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.)

Household income or consumption by percentage share

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

Distribution of family income - Gini index

34.6 (2002)
37 (1997)

Budget

revenues: $811.6 million
expenditures: $955.9 million (2008 est.)

Inflation rate (consumer prices)

8.6% (2008 est.)
4.5% (2007 est.)

Central bank discount rate

NA% (31 December 2008)
12.67% (31 December 2007)

Commercial bank prime lending rate

NA% (31 December 2008)
28.5% (31 December 2007)

Stock of money

$NA (31 December 2008)
$327.9 million (31 December 2007)

Stock of quasi money

$NA (31 December 2008)
$717.9 million (31 December 2007)

Stock of domestic credit

$NA (31 December 2008)
$285.8 million (31 December 2007)

Industries

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

Industrial production growth rate

11% (2008 est.)

Electricity - production

1.639 billion kWh (2006 est.)

Electricity - production by source

fossil fuel: 1.4%
hydro: 98.6%
nuclear: 0%
other: 0% (2001)

Electricity - consumption

1.344 billion kWh (2006 est.)

Electricity - exports

547 million kWh (2006 est.)

Electricity - imports

367 million kWh (2006 est.)

Oil - production

0 bbl/day (2007 est.)

Oil - consumption

2,996 bbl/day (2006 est.)

Oil - imports

3,036 bbl/day (2005)

Oil - exports

0 bbl/day (2005)

Oil - proved reserves

0 bbl (1 January 2006 est.)

Natural gas - production

0 cu m (2007 est.)

Natural gas - consumption

0 cu m (2007 est.)

Natural gas - exports

0 cu m (2007 est.)

Natural gas - imports

0 cu m (2007 est.)

Natural gas - proved reserves

0 cu m (1 January 2006 est.)

Current Account Balance

-$52 million (2008 est.)
$107.3 million (2007 est.)

Agriculture - products

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

Exports

$1.163 billion (2008 est.)
$922.7 million (2007 est.)

Exports - commodities

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

Exports - partners

Thailand 34.7%, Vietnam 13.2%, China 8.6%, South Korea 4.5% (2008)

Imports

$1.384 billion (2008 est.)
$1.065 billion (2007 est.)

Imports - commodities

machinery and equipment, vehicles, fuel, consumer goods

Imports - partners

Thailand 68.7%, China 11.3%, Vietnam 4.7% (2008)

Reserves of foreign exchange and gold

$803 million (31 December 2008 est.)
$540 million (31 December 2007 est.)

Debt - external

$3.179 billion (2006)

Economic aid - recipient

$379 million (2006 est.)

Currency (code)

kip (LAK)

Currency (code)

LAK

Exchange rates

kips (LAK) per US dollar - 8,760.69 (2008 est.), 9,658 (2007), 10,235 (2006), 10,820 (2005), 10,585.5 (2004)

Fiscal year

1 October - 30 September