Laos Country Risk Report Q4 2018
Laos' real GDP growth moderated slightly to 6.9% in 2017, from 7.0% in 2016, according to preliminary data from the Lao Statistics Bureau, and we maintain our forecast for real GDP growth to average 6.8% per annum between 2018 and 2020. This will be supported by strong growth in electricity exports and the construction sector.
The collapse of a dam in July has triggered a pause in the approvals of new hydropower projects and an official review of all existing ones in the country. This is likely a strategic move aimed at quelling angst among the population and the international community. However, the government is unlikely to cancel most ongoing projects as it will struggle to find alternative economic growth engines. We expect most development to resume after the disquiet fades. The leadership is likely to tighten media censorship and crack down on public opposition in the process.
Laos' foreign exchange reserves are insufficient; and this, combined with a high external debt, makes the country vulnerable to external shocks.
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