Laos Economy, GDP, Budget, Industry and Agriculture


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Laos Economy

View the information below regarding the economy of Laos. The summary and statistics contains gdp, industry, agriculture and more for Laos. If you need other information please visit the Laos Country Page.

  • Laos Government
  • Laos People
  • Laos Geography
  • Laos History

    GDP (2002): $1.8 billion.
    Per capita income (2002): $320.
    GDP growth rate (2003): 5.7%.
    Natural resources: Hydroelectric power, timber, minerals.
    Agriculture (50% of GDP): Primary products--glutinous rice, coffee, corn, sugarcane, vegetables, tobacco, ginger, water buffalo, pigs, cattle, and poultry.
    Industry (25% of GDP, 2002): Primary types--garment manufacturing, electricity production, gypsum and tin mining, wood and wood processing, cement manufacturing, agricultural processing.
    Industrial growth rate (2001 est.)--9.7%.
    Services (2001)--25% of GDP.
    Trade: Exports (2002)--$320 million: garments, electricity, wood and wood products, coffee, rattan. Major markets--France, U.K., Germany, Holland, Thailand, Belgium, U.S., Italy, Japan, Vietnam. Imports (2002)--$551 million. Major imports--fuel, food, consumer, goods, machinery and equipment, vehicles and spare parts. Major suppliers--Thailand, Singapore, Japan, Vietnam, China.

    Economy of Laos
    Laos is a poor, landlocked country with an inadequate infrastructure and a largely unskilled work force. The country's per capita income in 2002 was estimated to be $=310. Agriculture, mostly subsistence rice farming, dominates the economy, employing an estimated 85% of the population and producing 51% of GDP. Domestic savings are low, forcing Laos to rely heavily on foreign assistance and concessional loans as investment sources for economic development. In FY 1999, for example, foreign grants and loans accounted for more than 20% of GDP and more than 75% of public investment. In 2001, the country's foreign debt was estimated at $2.5 billion.

    Following its accession to power in 1975, the communist government imposed a harsh, Soviet-style command economy system, replacing the private sector with state enterprises and cooperatives; centralizing investment, production, trade, and pricing; and creating barriers to internal and foreign trade.

    Within a few years, the Lao Government realized these types of economic policies were preventing, rather than stimulating, growth and development. No substantive reform was introduced, however, until 1986 when the government announced its "new economic mechanism" (NEM). Initially timid, the NEM was expanded to include a range of reforms designed to create conditions conducive to private sector activity. Prices set by market forces replaced government-determined prices. Farmers were permitted to own land and sell crops on the open market. State firms were granted increased decision-making authority and lost most of their subsidies and pricing advantages. The government set the exchange rate close to real market levels, lifted trade barriers, replaced import barriers with tariffs, and gave private sector firms direct access to imports and credit.

    In 1989, the Lao Government reached agreement with the World Bank and the International Monetary Fund on additional reforms. The government agreed to expand fiscal and monetary reform, promote private enterprise and foreign investment, privatize or close state firms, and strengthen banking. In addition, it also agreed to maintain a market exchange rate, reduce tariffs, and eliminate unneeded trade regulations. A liberal foreign investment code was enacted and appears to be slowly making a positive impact in the market. The pace of reforms slowed during the Asian Financial crisis in 1997-98, from which Laos has yet to recover. Currently, completion of the Nam Theun II hydroelectric power project is a key Lao objective to increase revenue through selling electric power to neighboring Thailand.

    These reforms led to economic growth and an increased availability of goods throughout most of the 1990s. However, the Asian financial crisis, coupled with the Lao Government's own mismanagement of the economy, resulted in spiraling inflation and a steep depreciation of the kip, which lost 87% of its value from June 1997 to June 1999. Tighter monetary policies brought about greater macroeconomic stability in FY 2000 when inflation dropped to less than 1% per month. The economy continues to be dominated by an unproductive agricultural sector operating largely outside the money economy and in which the public sector continues to play a dominant role. Tourism is a growing industry and important source of foreign exchange.


  • Laos Government
  • Laos People
  • Laos Geography
  • Laos History