Macroeconomic Forecast Laos

Consumer price inflation (CPI) in Laos averaged 6.0% in 2010, fuelling concerns that inflationary pressures could force the government to cool economic growth in 2011. However, we note that headline CPI came in at a much slower pace of 5.8% y-o-y in December, compared to 6.7% in November and 7.9% in October. Despite the better-than-expected CPI figures, we note that rising food prices remain a threat over the coming months. Accordingly, we are maintaining our forecasts for CPI to average 5.0% in 2011, reflecting our view that inflationary pressures will remain elevated this year.

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