Asia Regional Integration Center

Economic growth probably slowed slightly in the first half of 2018 while inflation accelerated. Meanwhile, the first quarter of the year saw the dollar value of exports rise by a whopping 36.6%—the export acceleration likely driven by manufactures and electricity—while imports increased by 15.0%.

Economic growth is now projected at 6.6% this year, with agriculture and mining underperforming forecasts. Further, a series of floods damaged farm output and disrupted transport services. Agriculture is projected to grow by 2.0% this year, slowing from 2.9% growth in 2017. Electricity generation should increase by 8.0% and mining output to decline by 2.0%. Growth in construction and continued expansion in services are expected to partly cushion the adverse effects on growth from underperformance in agriculture and mining. Construction is benefiting from foreign direct investment in hydropower and transport projects such as the railway line from Vientiane to the border with the People’s Republic of China, now under construction. Meanwhile, an advertising campaign to boost visitor arrivals is catalyzing growth in services.