(KPL) Economic growth in Laos is projected to moderate but still remain robust at around 7 percent in 2016 driven by the power sector, some recovery of agriculture, and continued dynamism in manufacturing offsetting the lower output from mining.

Growing electricity exports have helped improve the external balance; however, low commodity prices negatively affected fiscal revenues and widened the deficit according to the World Bank. At the same time, the past growth pattern in Lao PDR, weakly linked to poverty reduction, the recent expansion of manufacturing, and low price pressures may have strengthened the link during 2016.

The economy is projected to grow at around 7 percent in 2016, a slight slowing from 7.4 last year. Around 1,350MW of installed capacity is expected to come on stream during 2016, increasing the capacity of the power system by more than 20 percent to around 6,200MW output. Agriculture is expected to recover following last year’s drought and output in manufacturing is to continue to expand albeit from a low base and mostly confined to the Special Economic Zones. Construction activity moderated as few power projects were completed in 2015; however, it has remained robust in 2016 supported by pipeline power projects as well as the development of real estate.

On the other hand, output in mining is expected to remain flat, while the number of tourist arrivals fell in the first half. Headline annual inflation averaged 1.3 percent during the first seven months of 2016 and is expected to pick up slightly as oil prices stabilize. Core inflation is at around 1.5 percent.

Growth in developing East Asia and Pacific is expected to remain resilient over the next three years, according to a new World Bank news release: A stable outlook for East Asia and the Pacific from 2016-2018 was predicted on October 5.

However, the region still faces significant risks to growth, and countries need to take measures to reduce financial and fiscal vulnerabilities.  Over the longer term, the report recommends that countries address constraints to sustained and inclusive growth, including by filling infrastructure gaps, reducing malnutrition and promoting financial inclusion.

The newly released East Asia and Pacific Economic Update expect China to continue its gradual transition to slower, but more sustainable growth from 6.7 percent this year to 6.5 percent in 2017 and 6.3 percent in 2018. In the rest of the region growth is projected to remain stable at 4.8 percent this year, rising to 5 percent in 2017 and to 5.1 percent in 2018. Overall, developing East Asia is expected to grow at 5.8 percent in 2016 and 5.7 percent in 2017-2018.

Among other large economies, prospects are strongest in the Philippines where growth is expected to accelerate to 6.4 percent this year, and in Vietnam where growth this year will be dented by the severe drought, but will recover 6.3 percent in 2017.  In Indonesia growth will increase steadily from 4.8 percent in 2015 to 5.5 percent in 2018, the report says, contingent on pickup in public investment and the successful efforts to improve the investment climate and increase revenues. In Malaysia, however, growth will fall sharply to 4.2 percent in 2016 from 5 percent last year because of weak global demand for oil and manufactured exports.

Among the smaller economies, the growth outlook has deteriorated markedly in some commodity exporters. In Mongolia, the economy is projected grow only 0.1 percent, down from 2.3 percent in growth in 2016 and down from 6.8 percent in 2015 because of declining prices and output of copper and liquefied natural gas. By contrast, growth will remain buoyant in Cambodia, the Lao PDR and Myanmar.

KPL