• GDP growth averaged 7.7% over the last decade, with income per capita reaching $2,460 in 2018. Economic growth in Lao PDR is expected to recover to 6.5% in 2019, from 6.3% in 2018. Notwithstanding the continued fiscal tightening and uncertainty in the global economy, growth is expected to be driven by the construction sector, supported by investments in large infrastructure projects, and a resilient services sector, led by wholesale and retail trade growth. Growth is projected to pick up in 2019-2020, supported by increased power generation, growing opportunities in the non-resource sectors from closer regional integration, and reforms to improve the business environment.

    The government is seeking to maintain macroeconomic stability by reducing the fiscal deficit and strengthening public debt management. As a result, there has been fiscal consolidation, with the fiscal deficit expected to decline to 4.3% of GDP in 2019 from 4.4% in 2018 and 5.5% in 2017. The government is strengthening revenue administration and efficiency through the introduction of electronic tax payments and modernizing the tax collection system, while containing wages and investment spending in 2019. Fiscal consolidation is expected to slow down the accumulation of public debt in the medium term.

    Until recently, growth has been largely dependent on natural resources, and this has placed increasing pressure on the environment. Environmental degradation is taking an economic toll on the country due the depletion of natural resources and adverse impacts on human health from pollution and waste. Recognizing the limitations of this growth model, Lao PDR has implemented reforms to support greener, more inclusive growth.

    A cleaner and more resource-efficient growth model in Lao PDR can also have a major human impact: 70% of the Lao population still depends on forests and waterways for income and nutrition, and better air quality will improve people’s health. Many of the country’s poorest people live in rural areas and are the most vulnerable to pollution, climate risks, and deforestation. The green growth agenda aims at improving local livelihoods by diversifying income sources and involving the private sector to spur market developments – for instance by promoting sustainable forest management and nature-based tourism.

    Lao PDR has made good progress over the past twenty years, including halving poverty, reducing hunger, and improving education and health outcomes. However, the country needs to accelerate investments in human capital. According to the Lao PDR Human Capital Index, a child born in the country today will only reach 45% of her potential compared to if she enjoyed full health and education. Malnutrition is a critical issue, with stunting affecting over 30% of children under five. The maternal mortality rate also remains high, at 220 per 100,000 births (2013), with only 38% of births in rural areas without roads occurring in a health facility. While a child in Lao PDR goes to school for 10.8 years, they learn only the equivalent of 6.4 years.

    The government’s National Nutrition Strategy (2015-2025) and Plan of Action (2016-2020) lay out an ambitious multi-sectoral convergence approach aimed at reducing chronic malnutrition (stunting) for children under five from the current 33% to 25% by 2025. This approach draws from the successful experience of other countries in addressing chronic malnutrition. The Sustainable Development Goals provide an overarching framework to monitor and evaluate progress on the government of Lao PDR’s social and economic plans and commitments.

    Last Updated: Sep 25, 2019

  • The World Bank Group (WBG) continues to work with the Government of Lao PDR to reduce extreme poverty and boost shared prosperity, supporting the Government’s 8th National Socio-Economic Development Plan 2016-2020. The World Bank Group’s current Country Partnership Framework (CPF) 2017-2021 was approved at the end of April 2017. The WBG carried out public engagement meetings with a wide range of stakeholders on Lao PDR’s Systematic Country Diagnostic (SCD), which underpins the CPF and highlights the key binding constraints to the twin goals of reducing poverty and boosting shared prosperity. A Performance and Learning Review to assess progress on the CPF will be conducted this year.

    Focus areas include:

    • Supporting Inclusive Growth: Putting public finances on a sustainable path and supporting financial sector stability, making it easier to do business, and investing in infrastructure for growth and inclusion.
    • Investing in People: Reducing the prevalence of malnutrition, improving quality of primary and pre-primary education and keeping girls in school, improving access to and quality of health services, reducing vulnerability and inclusive access to social services.
    • Protecting the Environment: Promoting environmental protection and sustainable natural resources management, putting in place enhanced disaster risk management and climate and disaster resilience.
    • Cross-cutting theme: Enhancing governance and creating a rules-based environment.

    The World Bank has an ongoing portfolio of 21 projects totaling around $560.2 million in Lao PDR, including 18 IDA-financed projects ($514.2 million), five co-financing trust funds ($26.3 million), and three stand-alone trust funds (US$19.7 million). The largest sectors by total financing are water (14%), environment and natural resources (13%), transport (11%), and energy and extractives (11%). The International Finance Corporation—the WBG institution that provides financing to the private sector—is also active, with a current committed investment of $22.87 million with a disbursed and outstanding portfolio of US$16.41 million in power, banking, and manufacturing sectors. The current IFC outstanding advisory services portfolio is about US$10.3 million. 

    Last Updated: Sep 25, 2019

  • The Poverty Reduction Fund (PRF)  is the largest multi-sector community-driven development project in the country. The PRF II project, active from 2011-2016, with total funding of about $65 million including $37.6 million from IDA and $10 million from the Government of Lao PDR, has benefited more than 650,000 rural poor in about 1,400 villages. In PRF II target villages, access to protected water increased by nearly 60 percentage points, and travel time to the nearest village was reduced on average by 114 minutes in the dry season and about 70 minutes in the wet season. More than 90% of subprojects implemented 4–6 years ago are still in good or fair condition, and PRF investments are overall equally or more cost effective compared to similar investments financed under other sources. The third phase, PRF III, approved in May 2016, continues to improve access to vital infrastructure including schools, health clinics, roads and drinking water systems in about 250 poor village clusters in 10 provinces.

    The Health Governance and Nutrition Development Project, which started in October 2015, aims to improve the coverage of reproductive health, maternal health, child health and nutrition services for women and children in Lao PDR. Over five years, the project is expected to benefit approximately one million women and children across 14 provinces. The project uses an innovative approach of linking disbursement of funds to improved performance in the delivery of basic health services. In addition, through a social and behavior change communication program for caregivers, children in high priority nutrition districts will benefit from improved counselling, changed behaviors and practices, and follow up of their growth. The project further includes support for strengthening information systems and technical assistance in improving the performance of health financing and health protection programs, with a view to progress toward Universal Health Coverage in Lao PDR. It received additional financing in 2017, aimed to scale up current efforts.

    The Early Childhood Education (ECE) Project, approved in April 2014, aims to increase the coverage and improve the quality of early childhood education services for 3 to 5-year old children in eleven provinces in Lao PDR. The project supports construction grants  for pre-primary classrooms using community-based contracting and establishment of Community Child Development Groups for 3 and 4 year old. It has been improving the quality of ECE services by supporting a services package, technical assistance and training as well as teacher and education officer training. Midline results from the project suggest interventions have made a significant difference to student enrollment and learning. The Global Partnership for Education II project, approved in April 2015, focuses on strengthening school-based management and implementing a new reading pedagogy approach aimed at improving early literacy by targeting children in pre-primary classes (age 5 years). The project covers 88 target districts in Lao PDR.

    The Customs and Trade Facilitation Project, which closed in 2017, helped to make border clearances faster and more efficient. A computerized customs clearance system, which now operates in 24 official customs checkpoints, takes payments electronically and provides this information in real-time to the government’s financial management system. The automated customs system covers 99% of formal trade at these checkpoints and has improved customs valuation, introductory risk management and trade statistics reporting. As part of the project, customs clearance procedures are now streamlined and modernized by reducing clearance steps. Being a landlocked country, trade costs remain relatively high but the average time to clear imports, exports and transits by Lao Customs has fallen significantly by 47%, from 17.9 hours in 2009 to 9.4 hours in 2017.

    The Second Trade Development Facility Project (TDF-2) assisted Lao PDR to implement trade and competitiveness priorities after its formal World Trade Organization accession in February 2013. It built on the achievements of TDF-1, which established a permanent National Trade Facilitation Secretariat and launched an electronic Trade Portal making all trade-related information publicly available. Under TDF-2, all non-tariff measures affecting trade were catalogued and published online, and assessments of regulations affecting trade in services and investment, as well as sector specific regulations for telecommunications, insurance and professional services, were completed. A matching grant, “Business Assistance Facility,” supported individual firms in building their skills and experience to become more competitive internationally.

    The Scaling-Up Participatory Sustainable Forest Management project has been working to build a solid foundation of sustainable forestry in Lao PDR, and has contributed to 2,242,257 hectares of forest area currently brought under management plans, as well as support to legislation and regulation reforms. Complementing this effort, the Second Lao Environment and Social project is helping to strengthen environmental protection management systems, specifically for the conservation of protected areas, enforcement of wildlife laws, and environmental assessment management.

    The Lao Road Sector Project 1 helped Lao PDR improve key national road services. Vehicle travel time on upgraded national roads was reduced by 40%, benefiting over 100,000 people who are regular users. The share of the provincial road network in good and fair condition increased from 46% to 64%, and about 1,100 km of roads damaged by Typhoon Ketsana have been repaired and improved. Road safety facilities were installed at identified blind spots to help reduce accidents. A contingency fund was established for quick restoration of passage and safety of national and provincial roads following disasters. The project also supported the Ministry of Public Works and Transport to enhance capacity for sector planning and management, road asset management, and implementation of road maintenance works at both central and local levels. The Road Sector Project 2 is now building on these achievements, and aims to strengthen maintenance systems to improve reliable road connectivity and provide immediate and effective response in case of crisis or emergency. This project recently received additional financing from the IDA Crisis Response Window to support building back better and increased resilience in the transport sector, following the 2018 floods.

    Last Updated: Sep 25, 2019



Lao PDR: Commitments by Fiscal Year (in millions of dollars)*

*Amounts include IBRD and IDA commitments


More Photos Arrow

In Depth


Celebrating Women in East Asia and Pacific

Meet the women driving a more equal East Asia and Pacific, including Viengsam Indavong of Lao PDR.


Improving Public Financial Management

An improved PFM system can benefit all Lao citizens and provide them with more information on how the national budget is used.


Conservation: for Wildlife and Communities

The Second Lao Environment and Social Project (LENS2) is improving protected area management and wildilfe law enforcement.


Super-Clean Cookstoves Promise Results for Women and Climate

An initiative is introducing 50,000 clean cookstoves to replace charcoal and wood-burning stove in three provinces.


Lao PDR Development: Past, Present and Future

In the last decade, Lao PDR has achieved strong growth. The challenge now is to end extreme poverty.


Expanding Employment Opportunities in Lao PDR

An additional 96,000 young people will be looking for jobs each year. This report recommends steps on how to create more and better jobs.


Poverty in Lao PDR: Achievements and Challenges

Lao PDR has made great strides in reducing poverty from 33.5% in 2003 to 23.2% in 2013.

Additional Resources

Country Office Contacts

Xieng Ngeun Village, Chao Fa Ngum Road, Vientiane
Tel: (+856-21) 266 200
1818 H Street NW, Washington DC, 20433 Tel: +1 202-473-4709