Laos inflation soars past 30% as national debt weighs on economy

This photo taken on Oct 14 2024 shows passengers sitting on a high-speed train at the railway station in Laos Luang Prabang province AFP-Yonhap — This photo taken on Oct. 14, 2024 shows passengers sitting on a high-speed train at the railway station in Laos' Luang Prabang province. AFP-Yonhap

SEOUL, November 18 (AJP) - Laos is experiencing severe economic hardship with inflation rates surging from 23 percent in 2022 to 31 percent in 2023, with projections showing 25 percent for 2024, the Asian Development Bank reported on Sunday, as prices of basic necessities like rice, sugar, oil, and chicken have nearly doubled.

The Southeast Asian nation's national debt has surpassed $13 billion, reaching 108 percent of GDP, largely due to Chinese loans funding the $6 billion China-Laos railway and hydropower dam projects, which the World Bank warned last week is "unsustainable."

The country faces annual interest payments of $1.7 billion this year and an average of $1.3 billion over the next three years, while its currency has lost about half its value against the U.S. dollar in the past three years.

"Laos' heavy reliance on imports, coupled with the depreciation of the kip, has led to rising domestic prices and inflation, weakening domestic demand and slowing economic recovery," said AMRO economist Poh Lin Ng, as nearly one in three Laotian children under five now suffers from malnutrition, one of the highest rates globally.

AJP