Logo of Phnom Penh Post newspaper Phnom Penh Post - World Bank: Lao current account deficit remains high

World Bank: Lao current account deficit remains high

Content image - Phnom Penh Post
Laos suffered the most costly floods in a decade last year after the collapse of a dam at the Xe Pian-Xe Namnoy hydropower plant in Attapeu province. AFP

World Bank: Lao current account deficit remains high

Loas’ current account deficit is expected to widen to 12 per cent this year as imports are projected to grow faster than exports, according to a recent report from the World Bank.

The rising trade deficit is driven by strong demand for imports relating to investment in mega infrastructure projects, particularly the under-construction Laos-China railway.

From January to May this year, the export sector remained stable due to the fact that strong exports of crops and semi-processed products offset a drop in mining exports triggered by lower metal prices.

Electricity exports remained stable compared to last year, while manufacturing exports such as electronic parts declined, according to the latest edition of the World Bank’s Lao Economic Monitor.

“This reflects the spillover effect due to the appreciation of the Thai baht.

However, this trend was compensated by an increase in exports of rubber, crops (cassava and fruits) and wood pulp to China (about $80 million in the first five months of this year or a seven-fold increase compared to the same period last year),” the report said.

In the meantime, imports somewhat grew and the increase in demand for machinery and equipment more than offset the fall in fuel imports.

The growth of the import sector was mainly driven by construction equipment, vehicles and machinery to support large projects.

The import of construction equipment and machinery, mainly from China, increased by 26 per cent year on year from January to May this year.

Meanwhile, fuel imports fell by 11 per cent in value terms due to lower average oil prices during the first five months of this year compared to the same period last year.

According to a government report, the value of imports is expected to reach $5.77 billion this year and the value of exports is projected to reach $5.51 billion, with the trade deficit at $259 million.

One of the main challenges for Laos is to boost agricultural productivity and the processing industry for export and to promote tourism so that more foreign currency flows to the country.

Last year, Laos suffered the most costly floods in a decade after the collapse of a dam at the Xe Pian-Xe Namnoy hydropower plant in Attapeu province.

More than 600,000 people across the country were affected by flooding, and 64 people lost their lives.

The total damage from last year’s floods was estimated at $371.5 million, equivalent to 2.1 per cent of the country’s projected 2018 GDP, and 10.2 per cent of Laos’ annual budget, according to the World Bank.

The government has forecast that the agriculture sector will grow by only 2.8 per cent this year despite the fact that the majority of the population is employed in this sector.

Economists recommend Laos attracts more investment in agriculture to boost exports by cutting red tape and providing more incentives for agriculture businesses. Vientiane Times


  • Bareknuckle champion wants Kun Khmer fighter

    Dave Leduc, who is the current openweight Lethwei boxing champion in Myanmar, has announced that he will travel to Cambodia this year to challenge SEA Games gold medallist Prum Samnang any time that is convenient, after their planned match later this month in Slovakia was

  • Five-year-old Hanuman dances his way into hearts of Cambodia

    A young talent from a new-established settlement has emerged, captivating the online world with his mesmerising performances of the traditional Cambodian monkey dance. Roeun Kakada is a five-year-old prodigy who has taken the social media sphere by storm with his exceptional dance skills and dedication

  • Fresh Covid warnings as Thai hospital fills

    A senior health official reminds the public to remain vigilant, as neighbouring countries experience an increase in Covid-19 cases, with the latest surge appearing to be a result of the Omicron XBB.1.5 sub-variant. Or Vandine, secretary of state and spokeswoman for the Ministry of Health,

  • PM declares ASEAN Para Games open

    The 12th ASEAN Para Games officially kicked off on the evening of June 3 at Morodok Techo National Stadium in Phnom Penh, with a spectacular opening ceremony featuring fireworks and performances by some of the Kingdom’s most accomplished talents. Tens of thousands of sports fans

  • Honda shutters Siem Reap football club

    Japanese football legend Keisuke Honda, the owner of Siem Reap football club Soltilo Angkor FC, has been forced to shut the club down, after it failed to attract sponsorship for the upcoming season. Honda, the former manager of the Cambodia men's national football team, said

  • Waterway job still pending for Kampot tourism port’s opening

    The search is still on for a contractor to expand and deepen the Kampot International Tourism Port’s waterway and deliver additional enhancements allowing safe access for larger vessels, nearly a year after the main construction work on the 4.25ha site was completed on June 30, 2022.