The Lao government has unveiled an ambitious strategy aimed at boosting national growth and modernising key sectors as Laos continues to recover from years of economic instability and high inflation. At the core of this plan is a target to achieve an average annual economic growth rate of at least five percent from 2026 to 2030.
The draft five-year development plan, announced this week, outlines government priorities that include strengthening the energy sector, modernising agriculture, developing tourism, investing in human capital, and accelerating the digital economy. The announcement comes amid signs of recovery, though challenges remain.
Inflation Falls but Living Costs Remain High
Inflation, a persistent concern in recent years, has shown signs of easing. Official data indicate that inflation declined from 15.5 percent in January to 12.7 percent in February, 11.2 percent in March, 11.1 percent in April, and reached 8.3 percent in May. Despite this downward trend, the cost of living remains high. Prices for domestic goods increased by 8.7 percent, while imported goods rose by 7.5 percent during the same period.
The development plan outlines sector-specific targets to support the country’s growth ambitions. Agriculture is projected to expand by 4.4 percent annually, contributing 21.3 percent to gross domestic product (GDP).
Industrial output is expected to grow by 5.1 percent, contributing 31.5 percent, while the services sector is forecast to grow by 5.6 percent, accounting for 36.8 percent of GDP. Revenue from tariffs and taxes is projected to increase by 3.6 percent, contributing 10.4 percent to the overall economy.
Investment Aimed at Boosting Incomes, Exports
To support these targets, the government plans to mobilise LAK 523,504 billion in investment (approximately USD 24.2 billion), equivalent to 20.2 percent of projected GDP over the five-year period. If the plan is implemented successfully, gross national income per capita is expected to reach LAK 60.3 million (USD 2,800), with GDP per capita projected at LAK 64.3 million (USD 2,983) by 2030.
Energy development is a major pillar of the strategy. The government aims to reduce domestic energy costs and expand export capacity through a diversified mix of energy sources. In addition to hydropower, future investment will focus on solar, wind, biomass, and potentially nuclear energy.
Infrastructure development will play a central role in improving regional connectivity. Planned projects include the construction of expressways and railways linking Laos to neighbouring countries, particularly China, Vietnam, and Cambodia. Proposed new railway lines include one connecting Vientiane to a Vietnamese seaport and another extending to southern Laos near the Cambodian border. These projects are expected to enhance trade logistics, support tourism, and increase the competitiveness of Lao exports.
The digital economy is also set for expansion, with upgrades to internet infrastructure aimed at improving accessibility and service delivery nationwide. At the same time, education reforms will address long-standing issues such as school dropout rates and aim to ensure equal access to quality education.
The five-year plan is part of broader efforts to prepare for Laos’s expected graduation from Least Developed Country (LDC) status by 2026. The strategy is intended to ensure a smooth transition and to lay the foundation for long-term, sustainable economic growth.
The final version of the plan is expected to be presented for official approval later in 2025.