VIENTIANE, June 20 (Xinhua) -- Strong economic growth in China and the Association of Southeast Asian Nations (ASEAN) will have a positive effect on Laos, as the countries are good trading partners for the land-locked country, Lao economists have said.
The high economic growth, notably in China, would drive stronger demand for commodities, especially mining and agriculture products, which are considered some of the main export products of Laos, senior economist from the National Economic Research Institute Dr Leeber Leebouapao said.
"I think that our economy will grow at the rate of at least 7 percent as set by the government," Leeber, who is also a member of the Lao National Assembly, told Lao state-run media Vientiane Times on Tuesday.
He added that the growth will mainly be driven by the hydropower sector, private investment and the construction of the railway project linking Laos and China.
According to the International Monetary Fund (IMF)'s recent World Economic Outlook Update, the positive economic growth forecast for the region and the world is good news for Laos as the Asian nation becomes increasingly integrated with the rest of the world.
The economic improvement in ASEAN nations and China could also create greater momentum for stronger economic growth in Laos this year and next, helping to drive regional integration, said the Vientiane Times report.
Nevertheless, Leeber is concerned about the fluctuation of exchange rates in the aftermath of the country's falling foreign currencies reserves, leading to appreciation of the Thai baht.
In addition, continued growth of the Lao economy has driven rising demands to import more goods for the industrial sector and food to satisfy the needs of local people, and this trade has to be paid for in foreign currencies.
The IMF has recommended Laos undertake further reforms aimed at diversifying the economy, boosting private sector activity, and improving the business climate.
Concerning structural policies, the IMF said addressing constraints in the ease of doing business, upgrading human capital and financial inclusion will help support diversification, competitiveness, and more inclusive growth.