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VIENTIANE (Laotian Times): Laos experienced four consecutive months of trade deficits from January to April this year. This situation has been exacerbated by rising inflation rates, leading to a record depreciation of the national currency, the Lao Kip.
In April, Laos recorded a two-way trade total of US$1.122 billion, with exports amounting to US$462 million and imports totaling US$660 million. This marks a trade deficit of US$198 million, the highest of the year and continuing a four-month streak of deficits for Laos. Data for May and June are yet to be released.
The latest statistics from the Lao government reveal that salt was the leading export, valued at US$84 million, followed by mixed gold and bullion at US$79 million, copper ore at US$40 million, and cassava at US$32 million. Other notable exports included sugar, bananas, rubber, cassava flour, and iron ore.
On the import side, diesel was the most imported item for Laos, valued at US$96 million, followed by land vehicles at US$56 million, mechanical equipment at US$36 million, and steel and steel products at US$29 million. Other top imports included plastic utensils, finished chemical products, gasoline, and spare parts.
Regarding trade partners, Vietnam emerged as the largest market for Lao exports, totaling US$160 million, followed by Thailand at US$107 million and China at US$103 million. Laos also exported goods worth US$43 million to Australia and US$19 million to Switzerland.
On the import side, Thailand was the largest source of Lao imports, amounting to US$336 million, followed by China at US$213 million and Vietnam at US$33 million. The United States and South Korea were also notable sources, with imports valued at US$17 million and US$12 million, respectively.
Despite facing a trade deficit, the Lao State Portal, as usual, states that the reported figure does not include the value of the electricity trade. This omission has had a profound impact on the country’s economy, contributing significantly to a persistently high inflation rate. In May, inflation in Laos soared to 25.8 per cent, marking a 1 percent increase from April’s 24.9 per cent.
Recently, Bounleua Sinxayvoravong, the Governor of the Bank of Laos, stated that inflation is expected to remain high through the end of this year, making it unlikely to achieve the government’s goal set in late 2023 of reducing the rate to 9 per cent.
In the meantime, the Lao kip continues its downward trend, reaching a new record low against major currencies such as the Thai baht, the US dollar, and the Chinese yuan.
As of 13 June, Lao commercial banks, including Banque Pour Le Commerce Exterieur Lao Public (BCEL Bank) and Phongsavanh Bank, are selling US dollars at LAK 21,825 and Thai baht at LAK 694.45. However, unofficial or “shadow” rates are significantly higher, exceeding LAK 25,000 for the US dollar and surpassing LAK 710 for the Thai baht, according to a local money exchange shop.
To tackle these pressing issues, the government has initiated the 7th National Assembly Session, scheduled to continue until early July.
This session aims to address significant socioeconomic challenges such as inflation, corruption, education problems including teacher and labor shortages, and drug trafficking. Despite these efforts, many residents say that additional measures and more concrete actions are necessary to effectively combat these issues. - Laotian Times/ANN
