Lao PDR Economic Monitor, June 2018 : Safeguarding Stability - An Ongoing Agenda
Lao PDR’s GDP growth slightly decelerated to 6.9 percent in 2017, but remained robust. The economy is expected to further ease to 6.7 percent in 2018. Recent expansion of labor-intensive industries (agriculture, manufacturing and services) and robu...
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| Language: | English |
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World Bank, Washington, DC
2018
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| Online Access: | http://documents.worldbank.org/curated/en/418261529002464394/Lao-PDR-economic-monitor-safeguarding-stability-an-ongoing-agenda-thematic-section-how-can-farmers-get-more-for-their-rice-and-consumers-pay-less http://hdl.handle.net/10986/29920 |
| Summary: | Lao PDR’s GDP growth slightly
decelerated to 6.9 percent in 2017, but remained robust. The
economy is expected to further ease to 6.7 percent in 2018.
Recent expansion of labor-intensive industries (agriculture,
manufacturing and services) and robust remittances inflows
are expected to continue to support poverty reduction.
Macroeconomic vulnerabilities remain significant despite
some improvement in economic management. The large deficit
has resulted in public debt reaching around 61 percent of
GDP in 2017. The current account deficit narrowed in 2017 on
the back of strong exports of electricity, manufacturing and
agriculture products, while improved metal prices supported
higher mining exports. Monetary conditions were slightly
loosened near the end of 2017; however, the monetary policy
transmission mechanism remains weak. The fiscal deficit is
expected to gradually decline while the external deficit
will temporary widen. These and other economic developments
and the economic outlook are discussed in the first section
of this report. The second section focuses on the high cost
of paddy production for farmers and the operational
inefficiencies among multiple players in the value chain
that are responsible for high consumer rice prices. The
study finds that Lao farmers receive relatively high
farm-gate price, yet high production cost eats their
profits. These constraints are largely structural and they
require: (i) facilitating value chain linkages between
farmers and millers through productive partnerships; (ii)
enhancing access to finance of farmers and millers; and
(iii) improving quantity and quality of public services
critical to reduce the currently high production costs and
enhance commercialization, e.g., seed, applied research,
mechanization, cooperatives, and good agricultural
practices. Reducing farm production costs appears to be the
most important challenge and opportunity at this point of
time for Lao PDR. |
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