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HomeAsiaLaos struggling to combat rising costs

Laos struggling to combat rising costs

'Quick read' news summary

Inflation in the small, land-locked nation of Laos has been spiraling for the last few months, shooting up by nearly 40% at the end of 2022 as a new prime minister tries to calm concerns about rising costs. 

The country’s National Statistics Bureau reported year-to-year inflation of nearly 39.3% in December 2022, up from 38.5% the month before, making it the highest among the Association for Southeast Asian Nations members.

In response, Lao authorities ordered the closing of all money exchange outlets and are now allowing only banks to exchange foreign currencies. The government is also banning the importation of several domestically produced goods, including some vegetables, eggs, pork, beef and fish. 

Trade officials told RFA that authorities were forced to take harsh economic measures because Laos has been suffering a massive trade deficit, hitting a whopping $926 million in 2022. 

“We are planning to reduce the import of goods and to promote domestic production,” a trade official from Savannakhet province told RFA’s Lao Service on the condition of anonymity. “We already have a lot of goods produced here in the country, but the problem is that our consumers prefer imported goods to domestic ones.”

Rising inflation presents a test for new prime minister Sonexay Siphandone, who began his new term this year promising to “raise the spirit of the revolution to the highest level.” Top economic officials are hoping for a recovery in tourism and a loosening of travel restrictions, particularly from China.

Authorities have banned imports of cabbage, garlic, lettuce, broccoli, onion, chilly, celery,

Inflation in the small, land-locked nation of Laos has been spiraling for the last few months, shooting up by nearly 40% at the end of 2022 as a new prime minister tries to calm concerns about rising costs. In response, Lao authorities ordered the closing of all money exchange outlets and are now allowing only banks to exchange foreign currencies. Top economic officials are hoping for a recovery in tourism and a loosening of travel restrictions, particularly from China.

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