Macroeconomic instability remains a worry even though Laos's economic growth rate was relatively high compared to that of other ASEAN countries. The growth is still vulnerable and unsustainable as the resource sector remained predominant in the growth structure such as electricity and construction that are capital intensive rather than labor intensive, according to a report from the Ministry of Investment and Planning.
The Lao state budget still lacks liquidity as budget revenue and expenditure are below the target, and the budget deficit to GDP ratio is still high.
Control on goods remained weak and not strict enough. Although foreign reserves increased, they were relatively low when compared to other countries. Many issues still have to be resolved to improve the business climate and promote quality investment.
There was no progress noted in the production base, which was illustrated by the minimal value addition from non-resource sector production, and this is impeding the growth of investments. Public debts remained a constraint for private investment, especially domestic private investment, said the report.
This year, the Lao government seeks injection of more than 42,000 billion kip (some 5 billion US dollars) into the economy to ensure that the gross domestic product (GDP) grows by 7 percent.
The macro-economy was stable in the first six months and enjoying robust growth, and the estimated growth rate of 6.7 percent is high compared to the growth rates in other ASEAN member countries, Lao Prime Minister Thongloun Sisoulith said during the National Assembly's (NA) ongoing fifth ordinary session.
Currencies, exchange and inflation have been well managed. Over the first four months of 2018, the average inflation rate was 1.62 percent, a decrease of 1.8 percent compared to the same period last year, according to the Lao prime minister.