Economy of Laos
The economy of Laos is a lower-middle income developing economy. Being one of the socialist states (along with China, Cuba, Vietnam, and North Korea), the Lao economic model resembles the Chinese socialist market and/or Vietnamese socialist-oriented market economies by combining high degrees of state ownership with openness to foreign direct investment and private ownership in a predominantly market-based framework.
Vientiane | |
| Currency | Lao Kip (LAK, ₭) |
|---|---|
| 1 October – 30 September | |
Trade organizations | |
Country group |
|
| Statistics | |
| Population | 7,425,057 (2021) |
| GDP |
|
| GDP rank |
|
GDP growth |
|
GDP per capita |
|
GDP per capita rank |
|
GDP by sector |
|
| 40.3% (Jan 2023 est.) | |
Population below poverty line |
|
| 36.4 medium (2012) | |
| |
Labor force |
|
Labor force by occupation |
|
| Unemployment | 9.4% (2017) |
Main industries | Copper, tin, gold, and gypsum mining; timber, electric power, agricultural processing, rubber construction, garments, cement and tourism |
| External | |
| Exports | $3.654 billion (2017 est.) |
Export goods | wood products, electricity, coffee, tin, copper, gold and cassava |
Main export partners |
|
| Imports | $4.976 billion (2017 est.) |
Import goods | machinery and equipment, vehicles, fuel, consumer goods |
Main import partners |
|
FDI stock | $15.14 billion (31 December 2012 est.) |
| −$2.057 billion (2017 est.) | |
Gross external debt | $17.16 billion (2020 est) |
| Public finances | |
Government debt | 63.6% of GDP (2017 est.) |
| −5.5% (of GDP) (2017 est.) | |
| Revenues | 3.099 billion (2017 est.) |
| Expenses | 4.038 billion (2017 est.) |
| Economic aid | $0.4 billion (1999 est.) |
| $1.27 billion (31 December 2017 est.) | |
Following independence, Laos established a Soviet-type planned economy. As part of economic restructuring that aimed to integrate Laos into the globalized world market, the country underwent reforms called the "New Economic Mechanism" in 1986 that decentralized government control and encouraged private enterprise alongside state-owned enterprises. As of 2007, Laos ranked among the fastest-growing economies in the world, averaging 8% a year in GDP growth. It was forecast that Laos would sustain at least 7% growth through 2019.
The key goals for the government included pursuing poverty reduction and education for all children, with an initiative to become a "land-linked" country. This was showcased through the construction of the nearly $6 billion high-speed rail from Kunming, China to Vientiane, Laos. The country opened a stock exchange, the Lao Securities Exchange, in 2011, and has become a rising regional player in its role as a hydroelectric power supplier to its neighbors China, Thailand, and Vietnam. The Lao economy relies largely on Foreign direct investment to attract capital from overseas. The long-term goal of the Lao economy, as enshrined in the constitution, is economic development in the direction of socialism.
Despite rapid growth, Laos remains one of the poorest countries in Southeast Asia. A landlocked country, it has inadequate infrastructure and a largely unskilled work force. Nonetheless, Laos continues to attract foreign investment as it integrates with the broader ASEAN economic community, due to its plentiful, young workforce, and favorable tax environment.
Laos has significant hydropower resources; the country also has large potential for small-scale hydro- and solar power. Excess electricity from hydropower is exported to other countries. Despite this, the country continues to also rely on coal in its electricity production.