VIENTIANE (Laotian Times): The Asian Development Bank (ADB) has lowered Laos’ 2025 GDP growth forecast from 3.9 per cent to 3.7 per cent, citing debt vulnerabilities, weak demand, and trade tensions.
The ADB’s September report notes that despite resilience in key sectors, ongoing fiscal and external challenges continue to weigh on the economy.
Despite these headwinds, services remain the primary growth engine, expected to expand 4.5 per cent. Tourism has rebounded strongly, with over 3 million visitors in the first eight months of 2025, bolstering retail, hospitality, and transportation sectors.
Industry is projected to grow 3.6 percent, supported by gains in energy and manufacturing, while agriculture is forecast to expand modestly by 1.3 per cent, aided by favorable weather conditions.
Meanwhile, inflationary pressures have eased considerably, with overall inflation falling to 4.5 per cent in August from 11.1 per cent in April. Food inflation dropped sharply to 3.1 per cent from 24.3 per cent year-on-year.
The Bank of Laos reduced its policy rate to 9 percent in August, while foreign reserves rose to US$2.7 billion, providing 3.1 months of import cover.
ADB Country Director for Laos, Shanny Campbell, said that despite the challenges, Laos has strong growth potential. He also praised the government’s efforts to stabilize the economy and its debt management.
However, ADB cautioned that fiscal constraints and trade tensions, including a 40 per cent US reciprocal tariff on Laos effective 1 August, among the highest in the region, could slow recovery.
The growth forecast for 2026 has also been revised slightly downward to 3.8 per cent from April’s projection of 4 percent.
At the regional level, ADB now projects Developing Asia’s growth at 4.8 per cent in 2025 (down from 4.9 per cent in April) and 4.5 per cent in 2026 (down from 4.7 per cent), as higher US tariffs weigh on exports.
Inflation is expected to ease to 1.7 per cent in 2025 before rising slightly to 2.1 per cent in 2026, supported by fiscal and monetary policy measures. - Laotian Times
