Growth has averaged 7½% over the last decade supported by the large run up in global commodity prices, electricity exports to Thailand, Vietnam and Cambodia and strong credit growth. Growth in 2017 dipped below 7% as robust electricity exports and construction activity was offset by tighter credit conditions and fewer tourist arrivals
Growth is expected to remain high at around 7% over the coming years supported by new hydropower projects and strong foreign investment from China in agriculture, manufacturing and services. Greater ASEAN integration will give Laos access to some 600m consumers. But the regulatory and procedural changes needed to conform with the ASEAN agreements will require structural adjustments, which could have significant costs in the near term—especially as infant industries in Laos start to compete across ASEAN. Favourable demographics will support growth over the long run; but infrastructure shortfalls and regulatory deficiencies could stymie this.