(KPL/VNA) The World Bank (WB) has forecast that Laos is on track to graduate from the group of least developed countries (LDCs) in 2026, citing encouraging signs of macroeconomic recovery while urging the government to sustain reforms and reduce reliance on international aid.

According to the WB’s latest report on the Lao economy, GDP growth in 2025 is projected at 4.2%, driven by a rebound in tourism, transport services, and continued expansion of the resource sector.

Inflation has eased sharply, falling from 24.5% in 2024 to 8.5% in the first 10 months of 2025, helping restore investor confidence and ease pressure on living costs.

The report also notes that Laos’ foreign exchange reserves rose to 2.8 billion USD in September, supported by a current account surplus. In November, the country returned to international bond markets, easing medium-term debt repayment pressures.

Mukdavanh Sisoulith, Director General of the International Organisations Department at the Lao Ministry of Foreign Affairs, said Laos has met all three United Nations criteria for LDC graduation and is moving towards official exit by the end of 2026.

She cautioned, however, that the transition will entail a reduction in official development assistance (ODA) and the loss of certain trade preferences.

To manage the transition, the Lao Government has outlined a strategic reform plan focusing on five key areas, including revenue mobilisation through tax reforms and the reintroduction of a 10% value-added tax.

The WB stressed that effective road infrastructure management is critical to strengthening the Lao economy, particularly given the country’s landlocked status and the decisive role of transport networks in determining logistics costs and competitiveness.

KPL