Inflation in Laos reaches over 25 per cent

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by Arno Maierbrugger - Aug 10, 2022 322 Lao kip

Inflation in Laos increased to 25.6 per cent year-on-year in July from 23.6 per cent in June, according to the latest report from the Lao Statistics Bureau.

Higher prices of fuel and consumer goods and the continuing depreciation of the Lao currency, the kip, are among the main factors driving the inflation., the bureau said.

As a landlocked country, the small nation of seven million people is heavily dependent on both imports and exports with trading partners in Southeast Asia. By disrupting supply chains and causing a spike in food and fuel prices, the Covid-19 pandemic has additionally put inflationary pressure on the country.

Transport costs rise over 50 per cent

Rising oil prices are impacting the transport price index, causing an increase in the price of goods that depend on fuel for their production or transport. According to the report, costs in the communications and transport category rose by 53.2 percent year-on-year in July.

Prices in the goods and service category surged by 25.6 per cent in the period, while the cost of medical care and medicines increased by 30 per cent.

Furthermore, the cost of food and non-alcoholic beverages, clothing, footwear and household goods all increased around 20 per cent and the cost of housing, water, electricity and gas surged by 19.7 per cent year-on-year.

Spiraling debt crisis

Laos is facing one of its worst economic crises in decades mainly owing to spiraling debt that is crippling the country’s finances and bringing it dangerously close to default.

According to the World Bank, Laos’ foreign and domestic debt has ballooned to more than $14.5 billion. About half of it is owed to China to fund projects including the newly inaugurated $5.9-billion China-Laos railway connecting the capital Vientiane with the Chinese border.

This compares to Laos’ current foreign exchange reserves of about $1.3 billion.

“The country is on the brink of default,” Anushka Shah, vice president and senior credit officer at Moody’s Investors Service, stated unequivocally in mid-June.

In early August, ratings agency Fitch downgraded Laos’ long-term foreign-currency issuer default rating to CCC- from CCC which means “vulnerable” and is just three notches from default.

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[caption id="attachment_38687" align="alignleft" width="300"] Lao kip[/caption] Inflation in Laos increased to 25.6 per cent year-on-year in July from 23.6 per cent in June, according to the latest report from the Lao Statistics Bureau. Higher prices of fuel and consumer goods and the continuing depreciation of the Lao currency, the kip, are among the main factors driving the inflation., the bureau said. As a landlocked country, the small nation of seven million people is heavily dependent on both imports and exports with trading partners in Southeast Asia. By disrupting supply chains and causing a spike in food and fuel prices, the...

Lao kip

Inflation in Laos increased to 25.6 per cent year-on-year in July from 23.6 per cent in June, according to the latest report from the Lao Statistics Bureau.

Higher prices of fuel and consumer goods and the continuing depreciation of the Lao currency, the kip, are among the main factors driving the inflation., the bureau said.

As a landlocked country, the small nation of seven million people is heavily dependent on both imports and exports with trading partners in Southeast Asia. By disrupting supply chains and causing a spike in food and fuel prices, the Covid-19 pandemic has additionally put inflationary pressure on the country.

Transport costs rise over 50 per cent

Rising oil prices are impacting the transport price index, causing an increase in the price of goods that depend on fuel for their production or transport. According to the report, costs in the communications and transport category rose by 53.2 percent year-on-year in July.

Prices in the goods and service category surged by 25.6 per cent in the period, while the cost of medical care and medicines increased by 30 per cent.

Furthermore, the cost of food and non-alcoholic beverages, clothing, footwear and household goods all increased around 20 per cent and the cost of housing, water, electricity and gas surged by 19.7 per cent year-on-year.

Spiraling debt crisis

Laos is facing one of its worst economic crises in decades mainly owing to spiraling debt that is crippling the country’s finances and bringing it dangerously close to default.

According to the World Bank, Laos’ foreign and domestic debt has ballooned to more than $14.5 billion. About half of it is owed to China to fund projects including the newly inaugurated $5.9-billion China-Laos railway connecting the capital Vientiane with the Chinese border.

This compares to Laos’ current foreign exchange reserves of about $1.3 billion.

“The country is on the brink of default,” Anushka Shah, vice president and senior credit officer at Moody’s Investors Service, stated unequivocally in mid-June.

In early August, ratings agency Fitch downgraded Laos’ long-term foreign-currency issuer default rating to CCC- from CCC which means “vulnerable” and is just three notches from default.

Support ASEAN news

Investvine has been a consistent voice in ASEAN news for more than a decade. From breaking news to exclusive interviews with key ASEAN leaders, we have brought you factual and engaging reports – the stories that matter, free of charge.

Like many news organisations, we are striving to survive in an age of reduced advertising and biased journalism. Our mission is to rise above today’s challenges and chart tomorrow’s world with clear, dependable reporting.

Support us now with a donation of your choosing. Your contribution will help us shine a light on important ASEAN stories, reach more people and lift the manifold voices of this dynamic, influential region.

 

 

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• TAGS
• Cost of Living
• Economic crisis
• inflation
• Lao kip
• Laos
• Public debt

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