Lao PDR, a lower-middle income economy with a GNI per capita of $1,600 in 2014, is one of the fastest growing economies in the East Asia and Pacific region. GDP growth averaged 7 percent over the last decade, with increasing use of the country’s natural resources – mostly water, minerals and forests – contributing one third of output growth. Construction and services also expanded as resource rents spread to the rest of the economy and growing regional integration boosted tourism and attracted foreign investment. Growth contributed to lowering the number of poor people to an estimated 23.2 percent of the population in 2012/13 from 33.5 percent a decade ago. However, poverty reduction has taken place at a slower pace compared to some regional peers. In addition, the macroeconomic environment remains challenging, reflecting both domestic, and increasingly external risks, and needs careful management.
Still, growth prospects are generally favorable. Natural resources - forestry, agricultural land, water, and minerals - comprise more than half of Lao PDR’s total wealth and the country’s key development challenge will be to ensure that this wealth is sustainably managed and transformed into investments in public infrastructure, better health and educational outcomes for all, especially the poor, and an efficient business environment. Managing natural resources to achieve long-term development and sustainability is also a key focus of the Government’s 8th National Socio-Economic Development Plan (NSEDP), to which the World Bank Group’s Country Partnership Framework is aligned. At the current pace of development and improvement in human and economic outcomes, Lao PDR is likely to meet the criteria for graduation from ‘Least Developed Country’ status by 2020.
As a member of the Association of Southeast Asian Nations (ASEAN) Lao PDR is increasing its integration into the regional and global economy. The launch of the ASEAN Economic Community at the start of 2016 will further liberalize the movement of goods and services, capital and high-skilled labor in the regional block. On February 2, 2013, Lao PDR officially became a member of the World Trade Organization, the culmination of a 15-year process of reforms and negotiations.
Lao PDR has made good progress on a number of Millennium Development Goals (MDGs), including halving poverty, reducing hunger and improving education and health outcomes. However, a few MDGs remain off track, most crucially on nutrition, with an estimated 44 percent of under-five children being stunted and 27 percent severely underweight. Lao PDR still has a high maternal mortality rate and limited skilled birth attendance and could also do more to place gender equality at the center of its national development plans. The Sustainable Development Goals (SDGs) post-2015, built on the MDGs, will also provide a framework for the government to monitor and evaluate the progress in its development plan implementation and commitments.
The World Bank Group (WBG) continues to work with the Government as it strives to meet the conditions for graduation from Least Developed Country status. The WBG’s operations in the country are guided by the Country Partnership Strategy (CPS) for 2012 to 2016, designed to build stronger institutions for sustainable and inclusive development and support the Government’s development strategy laid out in the 7th NSEDP for 2011-2015. The 8th NSEDP for 2016-2020 is near finalization.
Last Updated: Oct 09, 2015