Lao PDR

Investment & 
Operational
Climate

Although Laos reopened borders in 2022, the World Bank lowered Laos’ 2022 economic growth rate to 2.5% from its initial prediction of 3.6%. Limited fiscal and foreign currency buffers have posed a challenge to the government’s ability to mitigate the economic impacts of COVID-19 and by global economic disruptions, including Russia’s war in Ukraine. The Lao currency, the kip, depreciated more than 45% against the U.S. dollar at one point during 2022, according to the Economist Intelligence Unit, and year-on-year inflation exceeded 40% in December 2022. These factors have exacerbated the country’s macroeconomic vulnerabilities. Compared to other countries in the region, foreign direct investment (FDI) inflows to Laos have been relatively stable, driven primarily by infrastructure construction and power projects. In 2023, international and Lao economists project GDP growth will reach almost 4%, primarily due to the resumption of tourism and the reopening of China.