Economic growth in Lao PDR is projectedto rebound to 6.5 percent in 2019, up from 6.3 percent in2018. This pick up is expected to be driven by growth of theconstruction sector supported by investments in largeinfrastructure projects, and a resilient services sector,led by wholesale and retail trade growth. The Government hasremained committed to fiscal consolidation to contain publicdebt in the medium term by tightening public expenditure andimproving revenue administration. The medium-term outlookremains broadly favorable, but subject to downside risksfrom heightened uncertainty in the global and domesticenvironments. Prolonged trade partners, and spillover to thedomestic economy through lower trade and investment, andreduced prices for key export commodities. The authoritiesmay face difficulty in responding to such economic shocksgiven the low level of foreign currency reserves andsignificant external public debt. A priority is therefore tocreate fiscal space through improving tax policy andadministration as well as build up reserve buffers torespond to shocks. Additionally, improving the businessenvironment and reversing the decline in the global rankingof the ease of doing business, particularly for small andmedium-sized enterprises, could also contribute to greatermacroeconomic stability, job creation and poverty reduction.
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