Laos Country Risk Report Q3 2018
We forecast Laos' real GDP growth to average 6.8% per annum between 2018-2020. While we hold a positive view on the tourism and hydropower sectors, and the government is pushing to improve the business environment, increasingly wide external and fiscal imbalances suggests that the current growth rate will be difficult to sustain.
Corruption in Laos has worsened according to Transparency Inter-national and local officials, even as the media continues to report high-profile anti-corruption cases in the land-locked country. This will continue to pose downside risks to social stability in the country.
We expect Laos' current account deficit to average above 10% of GDP over the coming years, reflecting the high import content of the large-scale Kunming-Vientiane railway and various hydropower dam projects. We see no immediate danger to the country's balance of payments position as external financing is likely to remain strong, but economic distortions and longer-term risks are building up.
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