Last update: April 2014
The development of Lao PDR’s natural resources has helped the country achieve consistently high economic growth rates throughout the last decade. Reforms underway have reduced poverty and stimulated broad-based growth. However, fast growth is also putting the country under increasing macroeconomic strains that will need careful management. In the longer term, Lao PDR’s key challenge is to ensure that natural resource wealth is transformed into investments in improved public infrastructure, services, and better health and educational outcomes for all, especially the poor.
In 2012, Lao PDR reached a GNI per capita of $1,260, and the country moved up from its previous lower income status to become classified as a ‘lower-middle income economy’ in 2011. At this pace, Lao PDR is on track to achieve its long term vision: to graduate from the Least Developed Country status by 2020.
Natural resources - forestry, agricultural land, hydropower, and minerals - comprise more than half of Lao PDR’s total wealth. From 2005 to 2010, the hydropower and mining sectors combined generated about one third of the country’s economic growth. The growth in these sectors resulted in significant revenue increased which contributed to poverty reduction. It has also spurred progressive changes in environmental legislation.
Lao PDR, a member of the Association of Southeast Asian Nations (ASEAN) and the ASEAN Economic Community, is increasing its integration into the regional and global economy. On February 2, 2013, Lao PDR officially became a full member of the World Trade Organization, the culmination of a 15-year process of reforms and negotiations.
Lao PDR made good progress on many of the Millennium Development Goals but is off track in some areas. These include malnutrition (40% of under-five children are stunted), measles immunization, maternal mortality rate, skilled birth attendance, and gender equality.
In the Seventh National Social and Economic Development Plan (NSEDP) for 2011-2015, the government laid out its poverty reduction strategy to meet the MDGs by 2015, aiming to foster economic growth with equity, develop and modernize the country’s social and economic infrastructure and enhance human resource development.
The World Bank Group (WBG) continues to work with the government as it lays the foundations to graduate 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 support the government’s Seventh NSEDP and build stronger institutions for sustainable and inclusive development.