Unraveling the Current Economic Downturn in Laos: A Study of Factors and Implications
Keywords:
Lao economy, Economic Growth, Economic Factors, Economic Crisis, Economic PolicyAbstract
Laos was previously a country that enjoyed relatively high economic growth. However, at present, Laos is facing economic challenges. The objectives of this study are twofold: 1) to analyze the current state of Laos’ economy from 2010-2022, and 2) to identify the factors contributing to the current economic downturn in Laos spanning from 2001 to 2023. These objectives are achieved
through qualitative study methods, including literature survey and content analysis of statistical documents on economic indicators, as well as analyzing academic articles from the Scopus database and Web of Science. A total of 62 documents were considered. This article has examined the economic aspects of Laos during and post the COVID-19 period. The findings of the study reveal two key aspects. Firstly, several economic indicators of Laos today indicate that the country is undergoing an economic crunch. Secondly, scholars have
primarily focused on the influence of Lao government policies in shaping the country’s economy. Considering these findings, this article suggests that the Lao government should consider revising its current economic policies to address the ongoing economic crisis in the country. The economic downturn in Laos is primarily due to a lack of domestic industrial development policies and an overreliance on investment from a single country, namely China. To address this issue, Laos should implement policies aimed at achieving self-reliance in developing its own industries rather than depending on imports. Additionally, Laos should diversify its foreign investment strategies to avoid dependence on any one country. This approach would provide Laos with greater flexibility to adapt to economic changes.
References
Asiatimes. (2022, September 14). China-indebted Laos way more broke than advertised. https://asiatimes.com/2022/10/china-indebted-laos-way-more-broke-than-advertised/
Barney, K., & Souksakoun, K. (2021). Credit crunch: Chinese infrastructure lending and Lao sovereign debt. Asia and the Pacific Policy Studies, 8(1), 94-113.
CEIC Data. (2023). Laos external debt: % of GDP, 1996-2023. https://www.ceicdata.com/en/indicator/laos/external-debt--of-nominal-gdp
Cohen, P. T. (2009). The post-opium scenario and rubber in northern Laos: Alternative Western and Chinese models of development. International Journal of Drug Policy, 20(5), 424-430.
Douglas, J. (2023). Debt troubles in Laos reveal economic turmoil in developing world.https://www.wsj.com/articles/debt-troubles-in-laos-reveal-economic-turmoil-indeveloping-world-11657877403
Great Mekong Subregion. (2023). Lao people’s democratic republic. https://greatermekong.org/g/lao-pdr
International Banker. (2022, July 21). Can the Laos economy be rescued from the brink of default? https://internationalbanker.com/finance/can-the-laos-economy-be-rescuedfrom-the-brink-of-default/
Jiang, J. (2023). Laos faces debt crisis after borrowing billions from China. https://www.voanews.com/a/laos-faces-debt-crisis-after-borrowing-billions-from-china-/6641633.html
Kyophilavong, P., Shahbaz, M., Kim, B., & Jeong-Soo, O. (2017). A note on the electricity-growth nexus in Lao PDR. Renewable and Sustainable Energy Reviews, 1(1), 1251-1260 http://dx.doi.org/10.1016/j.rser.2017.03.055
Kyophilavong, P., Shahbaz, M., Lamphayphan, T., Kim, B., & Wong, M. C. S. (2019). Are devaluations expansionary in Laos? Global Business Review, 20(1), 72-83. https://doi.org/10.1177/0972150918803996
Kyophilavong, P., Shahbaz, M., Rehman, I. U., Souksavath, S., & Chanthasene, S. (2018). Investigating the relationship between trade balance and the exchange rate: The case of Laos’ trade with Thailand. Global Business Review, 19(3), 590-603.
Langbein, J., Gazizullin, I., & Naumenko, D. (2021). Trade liberalisation and opening in post-soviet limited access orders. East European Politics, 37(1), 139-158.
Li, D., & Wang, X. (2021). Land-use change and efciency in Laos’ special economic zones. Land, 10(10), 1012.
Li, P., & Xiao, Z. (2022). Impervious surface expansion in the China-Laos border area under the context of geo-economic cooperation: A case study of the Mohan-Boten Economic Cooperation Zone. Giscience & Remote Sensing, 59(1), 2184-2201.
Phimmavong, S., & Keenan, R. J. (2020a). Forest plantation development, poverty, and inequality in Laos: A dynamic CGE microsimulation analysis. Forest Policy and Economics, 111, 102055. https://doi.org/10.1016/j.forpol.2019.102055
Phimmavong, S., Keenan, R. J., & Ozarska, B. (2020b). Impact of forest plantation development in Laos: A dynamic general equilibrium analysis. Formath, 19, 1-18.
Radio Free Asia. (2023). As Laos’ new leader takes ofce, government focuses on tackling surging inflation. https://www.rfa.org/english/news/laos/laosnewpminflation-01042023173705. HTML
Rehbein, B. (2022). Laos in 2021: One more return to the subsistence ethic? Asian Survey, 62(1), 145-152.
Sims, K. (2017). Gambling on the future: Casino enclaves, development, and poverty alleviation
in Laos. Pacifc Affairs, 90(4), 675-699.
Sims, K. (2022). BRI as cognitive empire: Epistemic violence, ethnonationalism and alternative imaginaries in Zomian highlands. Singapore Journal of Tropical Geography, 43(3), 309-324.
Sims, K. (2023, January 28). Laos in limbo heading into 2023. https://www.eastasiaforum.org/2023/01/28/laos-in-limbo-heading-into-2023/
The World Bank. (2023a). GDP growth (annual %). https://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG?end=2022&locations=LA&start=2010&view=chart
The World Bank. (2023b). Inflation, consumer prices (annual %) - Lao PDR. https://data.worldbank.org/indicator/FP.CPI.TOTL.ZG?end=2022&locations=LA&start=2010&view=chart
The World Bank. (2023c). Official exchange rate (LCU per US$, period average) - Lao PDR. https://data.worldbank.org/indicator/
PA.NUS.FCRF?end=2022&locations=LA&start=2010
The World Bank. (2023d). Unemployment, total (% of total labor force) (modeled ILO estimate)- United Arab Emirates, Lao PDR. https://data.worldbank.org/indicator/SL.UEM.TOTL.ZS?end=2022&locations=LA&start=2010&view=chart
Vientiane Times. (2022, July 18). Chinese investment in Laos tops US$16 billion. https://asianews.network/chinese-investment-in-laos-tops-us16-billion/
Wang, J., Sui, L. C., Yang, X. M., Wang, Z. H., Ge, D. Z., Kang, J. M., & Liu, B. (2019). Economic globalization impacts on the ecological environment of inland developing countries: A case study of Laos from the perspective of the land use/cover change.
Sustainability, 11(14), 1-21.
