Lao PDR Systematic Country Diagnostic March 2017 CONTEXT In recent years, Lao PDR has made significant development advances. Gross Domestic Product (GDP) growth averaged TOP PRIORITIES 7.8 percent per year over the past decade, making Lao PDR the 13th fastest-growing economy globally. Incomes rose, poverty declined, and access to some basic services, including education, health, and infrastructure, improved considerably. However, the increase in incomes for most of the population was not commensurate to the GDP growth. Growth was driven by natural resources with limited job creation. Agriculture employed most of the workforce, and productivity was stagnant. Loss of revenue and weak public financial management also prevented sharing benefits of growth. Promoting strategic use of natural Increasing agricultural productivity to Investing in improving nutrition to As a result, poverty reduction was slower compared to peers. resources and responsible management support incomes achieve children’s full potential of the environment Malnutrition continues to be high, and the risk of falling into poverty is a reality for a large part of the population. Growing public debt burden, systemic risks in the financial sector, and low reserve buffers may test macroeconomic stability which can ignite inflation, lower living standards, and hurt public services delivery. Continued environmental degradation and climate change will also pose challenges. Improving quality of education and Putting public debt on a sustainable QUICK FACTS keeping girls in school path, strengthening financial sector stability, and competitive exchange rate Only 44% of children under five 82% HIGH PRIORITIES 160,000 were stunted in 2012. 35% non-agriculture wage jobs 82% of workers in the private sector were For every percent of GDP are in agriculture or created between growth, poverty in Lao PDR 35% of girls self-employment 2002 and 2012 declined by 0.4%. aged 18 were married. Making it easier to do Investing in infrastructure Improving access to and business and create good jobs for growth and inclusion quality of health services for more productive people US$1,740 23% 99% Lao PDR is now a lower-middle- MEDIUM PRIORITIES income country with a Gross Extreme poverty fell from Primary school enrollment Maternal and child mortality National Income (GNI) per 46% in 1992 to rose from nearly 60% in are now less than half of their capita of US$1,740 in 2015. 23% in 2012/13. 1992 to 99% in 2011. levels in the early 1990s. 40% 90% Putting in place a strengthened disaster Introducing a basic social protection Improving inclusiveness of the financial 70% Number of banks, including risk management system to lower vulnerability sector to improve access to credit and lower risks state-owned banks, have low Forest cover has fallen from Electrification now exceeds Public debt is approaching capital buffers and growing 70% in 1940 to around 40% 90% of households. 70% of GDP. non-performing loans. of the territory in 2010. < Enhancing governance and creating a rules-based environment > PATHWAYS TOWARDS MORE INCLUSIVE GROWTH 1 2 3 hotel Sustainable and Efficient Unlocking the Potential Building the Assets of the People to be Management of Natural Resources in Non-Resource Sectors able to take on increased opportunities, reduce risks and protect gains Strengthening institutions will be key to progress. This should include improving institutions to manage macroeconomic volatility, strengthening accountability of service providers, and ensuring a level-playing field to promote competition. Agricultural productivity lags behind other countries in the region, so this area has great potential. Strategic and responsible use of natural resources is also critical to growth and livelihoods. Improving nutrition should be a top priority, as 44 percent of under-five-year-olds were stunted in 2012. More and better education can improve agriculture and prepare people for the transition toward non-farm jobs. Finally, addressing risks in the fiscal and financial sectors will ensure stability of growth and public services. CONTACT US: The World Bank Group Lao PDR Country Office facebook.com/WorldBankLaos East Asia and Pacific Region Xieng Ngeun Village, Chao Fa Ngum Road twitter.com/WB_AsiaPacific Chantabouly District, Vientiane, Lao PDR Email: worldbanklaos@worldbank.org youtube.com/user/WorldBank Tel: (+856-21) 266 200 worldbank.org/lao