Macroeconomic Forecast Laos

July 2005 | Macroeconomic Forecasts

The government has set an inflation target of 9% in 2004/05. If achieved, this would be the first time that inflation had been in single digits for many years. Based on price trends in H104/05, the inflation target indeed looks achievable. The pace of average inflation dropped in 2004, falling to 10.5% compared with 15.5% in 2003. This may partly reflect the impact of the kip's appreciation against the US dollar in Q404 (although most of Laos's trade is conducted in Thai baht against which the Lao currency has fallen). In January and February m-o-m inflation rose 0.3% and 0.4% respectively after falling in December. Higher world oil prices are likely to pose a challenge to the government's inflation target but so far prices are reasonably stable

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