The financial sector has been told to carry out global economic and financial research about potential impacts on Laos so that the country can prepare to handle any possible changes in its circumstances.
Prime Minister Thongloun Sisoulith was addressing a nationwide budgetary and treasury meeting held in Vientiane last week which was attended by more than 400 officials.
The PM highlighted the significance of economic and financial research to project the scenarios ahead, notably those related to trade and investment in the region and the world, as well as identify the fluctuation of commodity prices.
He said without thorough research, it will be hard for government sectors to formulate economic and financial plans in a way that reflect the reality of the nation.
Mr Thongloun said while Laos enjoyed robust economic growth of 7.9 percent annually over the past five years, people should not be excited with this figure as it does not reflect the entire situation of the country.
For instance, this year Laos faced declining prices of rubber, coffee and mining, which directly impacted on the country’s economy.
That’s why the PM recommended the government sectors not rely too much on GDP growth but instead concentrate on addressing poverty and livelihood improvements for local people.
In many countries in the world, they prefer to record gross national income (GNI) rather than GDP as it defines economic status and the poverty situation in a way that is closer to reality.
Generally speaking, poor countries like to quote GDP as a measure of economic activity as it is larger than GNI.
However this can be misleading because GDP includes foreign revenues earned on a nation’s soil but the majority of this money will be repatriated and does not contribute to the country’s economy.
Meanwhile, GNI equals GDP plus the income of Lao citizens working or operating businesses abroad and sending remittances home, minus the income of foreigners working or operating businesses in Laos and sending payments back to their home count ries.
According to the government report earlier this year, the value of GDP in Laos reached 102,320 billion kip (US$12.8 billion) with GDP per capita climbing to 15.8 million kip (US$1,970).
However the growth relied too much on foreign investment in the resource secto r, which is considered unsustainable.
The government has forecast that the country’s economy will continue to grow at the rate of not less than 7.5 percent over the next five years, which will be driven largely by mega investment projects.
However economic development in Laos is now entering a period of rising competition after the country joined the World Trade Organisation and Asean Economic Community recently. This provides both opportunities and challenges for Lao people to improve themselves and deal with regional changes.
Source: Vientiane Times