Thailand
Laos: GDP growth target lowering mulled: DPM
Discussions are taking place to whether the government should propose that the National Assembly (NA) consider adjusting the economic growth target, Deputy Prime Minister Somdy Duangdy has said.
The consideration to lower the gross domestic product (GDP) growth target came amid global challenges which make it unlikely for the government to attain the 7 percent growth target.
GDP grew by 6.9 percent last year with this year’s growth was estimated to decline further to 6.5 percent. Growth fell short of the 7 percent target set in the five-year socio-economic development plan approved by the National Assembly (NA).
Government economic analysists said the growing trade dispute between world economic powers has resulted in global uncertainty in trade, investment, finance and other factors ‘unfavourably’ influencing the economic development environment in Laos.
This year’s severe flooding lashing 15 provinces also impacted implementation of the development agenda with agricultural production estimated to fall short of the target by 10 percent.
Additionally, economists suggested that the suspension of consideration for new proposals to survey or invest in hydropower plants following the collapse of a dam in Attapeu province would also affect the GDP growth target.
In light of the challenges, a proposal was raised at the two-day meeting between the government cabinet, Vientiane Mayor and provincial governors in Vientiane last week suggesting the cabinet ask the parliament to consider lowering the growth target.
“A decision has not been made if a proposal should be submitted [to the NA] to adjust the targets. We are still discussing the matter,” Mr Somdy told local media shortly after the meeting.
He added the government would investigate to what extent the suspension of consideration of new hydropower projects would impact growth.
Minister of Planning and Investment, Dr Souphanh Keomixay believed the suspension would not impact the economy given it was just imposed on new proposals.
But those projects whose memorandum of understanding or investment contracts were previously signed as well as those under construction would need to undergo review to check if their design and construction meet safety standards.
Those projects whose design and construction were proved to meet safety standards could proceed with their construction, Dr Souphanh said.
Vice Dean of the Faculty of Economics and Business Management, National University of Laos, Associate Professor Dr Phouphet Kyophilavong suggested that the review would slow the implementation process of the approved hydropower projects thereby decreasing material and labour demand and hence impacting GDP growth.
However, he said, the suspension and review would only impact the economy in the shorter-term but would have a positive impact in the longer-term as the review would ensure safety standards for hydropower development and create confidence for investment in the energy sector. Although farmlands across Laos were severely damaged by flood, the country will enjoy moderate economic growth in 2018 and 2019 driven by construction and service sectors, Asian Development Bank (ADB)’s Senior Economics Officer, Mr Soulinthone Leuangkhamsing said. In its updated annual economic publication, Asian Development Outlook (ADO) 2018, ADB projects Laos’ GDP to grow by 6.6 percent in 2018 and 6.9 percent in 2019, slightly lower than its April estimates of 6.8 percent for this year and 7.0 percent for next year.
Public Management Specialist at ADB’s Lao PDR Resident Mission, Mr Rattanatay Luanglatbandith said the global economic tensions largely driven by the trade conflict between the US and China would certainly pose a risk to every country because the world is integrated. On the other hand, the tariffs imposed by the US against made-in-China goods also provided an opportunity as Asia’s largest economy will target other regions including Asean to increase its trading and investment partnerships.
Source: http://www.vientianetimes.org.la/freeContent/FreeConten_GDP_227.php