Asia Regional Integration Center

The economy gradually recovered in 2021 from its worst contraction in decades. Real GDP expanded by 2.3% after shrinking by 0.5% in 2020. Industrial and agriculture exports contributed much to the recovery. Industrial output expanded by 4%, supported by increased electricity and mining production, and rising construction activity. Inflation moderated to 3.7% in 2021 from 5.1% in 2020. The central bank allowed the official exchange rate to depreciate—on average, the kip fell 7.5% against the United States dollar—causing prices of imported goods to rise, especially petroleum products and construction materials. The authorities increased oil prices 13 times in 2021. Recovery is expected to continue with GDP growing by 3.4% in 2022 and by 3.7% in 2023.