Laos Faces Continued Economic Challenges in 2024

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Engaging with the daily news updates on Laos often feels like a repetitive journey through familiar headlines. Whether it’s “Lao PM Introduces New Measures to Tackle Inflation” or “Lao PM Highlights Key Measures to Address Economic Crisis,” the cycle seems unbroken, with little tangible progress. A sentiment echoed by a Laotian interviewed by Radio Free Asia, expressing frustration over the government’s repeated promises with minimal results.

The narrative from Vientiane portrays Prime Minister Sonexay Siphandone as a fresh start, yet his involvement in economic matters dates back to his tenure as the minister of planning and investment. Thus, the economic challenges have deeper roots than acknowledged. Vientiane attributes Laos’ economic woes to administrative and fiscal issues, advocating for central bank intervention to stabilize inflation and currency depreciation.

However, Laos faces a predicament common in economic crises—external factors beyond its control, like global economic trends and trade dynamics, coupled with longstanding structural issues. These problems, flagged by National Assembly members, include soaring national debt, excessive imports, poor revenue collection, and financial mismanagement.

The ramifications are profound, with Laos witnessing a decline in per capita GDP and troubling signs of a lost generation. Migration to Thailand for employment exacerbates social and economic strains, revealing the harsh reality facing many Laotians. While emigration might ease political tensions, it underscores systemic failures.

The World Bank’s assessment underscores the fiscal system’s inadequacy, highlighting high debt, revenue challenges, and limited reserves. These are consequences of the ruling party’s policies, compounded by dynastic politics, where children of political elites inherit power. Such a system breeds skepticism about genuine reform.

Looking ahead, prospects for improvement in 2024 remain uncertain, with persistent inflation and modest economic growth projections. Laos’ ASEAN chairmanship offers little solace, as citizens question the expenditure on lavish events and VIP accommodations. Unlike past summits with notable international guests, the upcoming event lacks the same allure.

In essence, the ASEAN chairmanship may further alienate the populace, who question the prioritization of grand spectacles over substantive improvements. The absence of prominent figures like Barack Obama and Xi Jinping underscores the disconnection between political elites and ordinary citizens, raising doubts about the true purpose of such gatherings.