Inflation in Laos hits new high and could see 3% economic growth

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The Governor of the Bank of Lao PDR (BoL), Sonexay Sithphaxay. VIENTIANE SCHEDULES

Laos’ year-on-year inflation rate fell from 4.72 percent in October to 5.04 percent last month, according to the latest report from the Laos Bureau of Statistics.

It is the biggest consumer price hike on record since August last year, raising concerns about the rising cost of living in the country amid the Covid-19 crisis. Inflation is due to several factors, including the price of fuel which rose 48.68% year-on-year last month.

The depreciation of the Lao kip against the Thai baht and the US dollar has also pushed up prices in local markets, especially for imported products. Most companies base the cost of their products on foreign currencies or charge customers in foreign currencies so as not to run the risk of losing profits.

In the first 11 months of 2021, Laos recorded a trade deficit of $ 336 million, with the value of imported goods reaching $ 5.24 billion while exported goods were valued at $ 4.9 billion. The government is trying to stimulate domestic production for exports while trying to minimize imports.

Last month, costs in the communications and transportation category were up 1.92% month-on-month and 12.45% year-on-year. The prices of cars and transport equipment rose 10.14% and 23.26% respectively year-on-year.

The cost of medical care increased 1.77% month on month and 7.98% year on year due to the rise in the cost of drugs and hospital services. The price of drugs and medical services increased 7.77% year-over-year, while the cost of hospital and clinical services jumped 11.89% year-over-year.

Meanwhile, prices in the restaurant and hotel category increased 0.38% mo. % year-on-year, while prices for guest houses and hotel services fell 1.23% year-on-year.

In addition, prices in the housing, water, electricity and gas category increased by 1.21% year on month and 5.42% year on year. The cost of construction services and gas and other energy sources increased by 9.09% and 5.93% year-on-year, respectively.

The cost of clothing and footwear increased 0.48% month on month and 4.07% year on year, with the price of men’s clothing increasing 5.84% and women’s clothing increasing 2.95% over a year. -year.

At the same time, the cost of food and non-alcoholic beverages fell 1.34% month over month, but increased 2.61% year over year. The products that drove prices up in this category were cooking oil (24.95 percent yoy), seasonings (19.96 percent), and cheese and eggs (15.93 percent) .

The cost of alcohol and tobacco increased 6.07% year-over-year, while the prices of household items increased 4.89% year-over-year, personal and sleeping gear jumped 9.51% year-over-year. year.

Meanwhile, the Bank of Lao PDR (BoL), the central bank, said the International Monetary Fund (IMF) expects Lao economy to grow 2.1% in 2021 and 3%. in 2022.

Agriculture and the industrial sector will play an important role in this growth, the IMF said.

The growth of the Lao economy was discussed during a two-day virtual conference between the IMF Executive Board and the BoL held on December 21-22.

On behalf of the government, BoL Governor Sonexay Sithphaxay led the Laotian delegation, which included BoL Deputy Governor Vatthana Dalaloy, Deputy Finance Minister Dr Bounleua ​​Sinxayvoravong, and others bank managers.

Prior to the conference, the IMF’s Laos Assessment Team at IMF Headquarters conducted an assessment with government agencies responsible for Lao macroeconomics, including BoL, Ministries of Finance, Planning and Investment. ; Industry and Commerce; and Energy and Mines, and commercial banks.

As a result of this assessment, the IMF concluded that economic growth for 2021 would be 2.1% and 3% for 2022, following the critical impact of the Covid-19 pandemic in Laos and others. regions of the world.

This economic growth will apparently be driven by agriculture and the industrial sector, and the long-term growth of the Lao economy is still vulnerable to internal and external factors, such as an increase in the rate of inflation and fluctuation of the economy. exchange rate, according to an IMF forecast.

During his participation in the virtual conference, the governor of the BoL made a presentation on the determination of the government to manage various unexpected risks and to prioritize several issues, such as the national agenda to build confidence between domestic and foreign investors. .

Sonexay thanked the IMF assessment team for their contribution to the assessment of the Lao economy and for providing guidelines for macroeconomic development in Laos.

VIENTIANE TIMES / ASIA INFORMATION NETWORK


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