Lao economy to grow 8.6 per cent this year, World Bank says

Jul 1, 2011, 7:03 GMT

Vientiane - Laos' economy would grow 8.6 per cent this year, boosted by exports of energy, minerals and garments, media reports said Friday, citing the World Bank.

Such growth in the gross domestic product would better 2010's 8.4 per cent, the Vientiane Times reported.

'The garment sector is expected to see 15- to 20-per-cent growth this year due to the European Union's relaxation of material sourcing requirements, which will enable the Lao garment industry to access raw materials from foreign countries to produce more goods for the European market,' the World Bank said.

Under previous EU rules, garments made in Laos needed to use local materials to qualify for preferential import tax treatment. 'Dynamic demand for Lao exports from Thailand, Vietnam, China and the European Union will boost growth,' the World Bank forecast.

It added that the start-up of a lignite-fired power plant in Xayaboury province and full-scale operation of hydropower plants would also add to the growth of the Lao economy.

The majority of Laos' energy is exported to neighbouring Thailand.

The World Bank cautioned that Laos was also heading for higher inflation this year.

Inflation reached 9.24 per cent in April, forcing the government to call an urgent meeting to discuss measures to address this issue.

To curb rising food prices, the government has slapped a ban on grain exports.