Lao PDR’s economic growth is estimated to have picked up to 4.5 percent in 2024 from 4.2 percent in 2023. El Niño weather conditions in 2023 dampened electricity and agricultural production, which were partially offset by a robust expansion in the services sector, including tourism-related and logistics industries. A recovery in the electricity sector and continued growth in the services sector are expected to boost economic activity.

Lao PDR continues to grapple with strong headwinds. Amid high debt service obligations, the kip remains significantly weaker than its level two years ago, though it has shown signs of stabilization since mid- 2024. Inflation remained elevated at about 25 percent in 2024 but is expected to decline to 15 percent in 2025.