ADB projects 4 percent growth for Laos amid external, climate risks

Economic growth in Laos is projected to moderate to 4.0 percent in 2026 before recovering to 4.5 percent in 2027, according to the latest edition of the Asian Development Outlook (ADO) released by the Asian Development Bank (ADB) on Wednesday.
The report said that although macroeconomic stability has improved, Laos remains vulnerable to external shocks and climate-related risks that could weigh on economic activity.
Lower inflation and greater exchange rate stability have helped strengthen economic confidence. However, growth is expected to slow this year due to higher global fuel prices and import costs, weaker external demand, and limited fiscal space.
ADB Country Director for Laos, Shanny Campbell, said the country had made important progress in restoring macroeconomic stability, with easing inflation and a more stable exchange rate supporting economic activity.
“Maintaining sound macroeconomic policies while improving trade facilitation, diversifying exports, and integrating climate resilience into development planning will be critical to sustain inclusive and resilient recovery,” she said.
The services sector continues to support economic activity, with international tourist arrivals reaching 2.6 million in the first half of 2026, an increase of 9.9 percent year on year.
Industry is expected to remain a key driver of growth, supported by investment in renewable energy, construction and mining, as well as electricity exports. Agriculture is projected to make a more modest contribution.
However, both agriculture and industry face growing exposure to climate-related risks, which could affect hydropower generation, agricultural production, exports and foreign exchange earnings.
Inflation is forecast to average 8.0 percent in 2026 before easing to 6.5 percent in 2027. Meanwhile, the current account surplus narrowed significantly in the first half of this year as imports increased rapidly while exports remained subdued.
The ADO identified several risks to the outlook, including higher global prices, weaker tourism earnings and continued debt-servicing pressures, which could constrain economic growth.
Climate-related shocks could further affect key economic sectors and reduce foreign exchange earnings, particularly if floods, drought or uneven rainfall disrupt hydropower generation and agricultural production.
The ADB is a multilateral development bank supporting sustainable, inclusive and resilient growth across Asia and the Pacific. Founded in 1966, it is owned by 69 members, 50 of them from the region.

By Times Reporters
 (Latest Update September 23, 2026)