10 Dec, 2025

Lao Economy Improves but Lasting Growth Requires Sustained Reforms, Road Network Preservation

World Bank – Increased exports, foreign investment and tourism have helped Laos begin to emerge from a prolonged economic slowdown, according to a World Bank economic update, released today. Further reforms in the business, finance and infrastructure sectors would help the country sustain its progress.The report, Consolidating Recent Reform Momentum for Stability and Growth, shows that strong foreign investment and a current account surplus are helping Laos to gradually rebuild its reserves of foreign currency, which in turn have stabilized the exchange rate and brought down inflation.The World Bank estimates GDP growth at 4.2 percent over 2025, with steady expansion in energy, mining, and manufacturing, and a growing regional economy boosting exports. This economic activity is helping Laos offset the impacts of low public expenditure and high debt repayments.“The Lao economy has emerged from four difficult years thanks to shrewd reforms and stronger fiscal management”, said Khwima Nthara, World Bank Country Manager for Laos. “There is an opportunity now to consolidate that momentum by continuing the reform agenda so that the country can increase public spending on essential services such as education, health, and roads”.Growth is expected to remain stable in 2026, with services and resource-based sectors continuing to drive economic activity. However, the outlook in the medium term remains constrained by low productivity, skill shortages, and infrastructure gaps.The report recommends sustained reforms and deeper regional integration to help ensure a positive outlook, notably, by curbing tax exemptions, establishing a strong legal framework for public–private partnerships, strengthening public debt management, enhancing supervision of commercial banks, and improving the business environment.The update contains a special section on Preserving Lao Road Assets, which notes that a well-functioning road sector is important for growth, competitiveness, and fiscal sustainability. Reliable roads reduce transport costs, improve access to markets, and strengthen links between production hubs and borders. Weak road networks raise logistics costs, dampen private sector activity, and increase the fiscal burden through frequent repairs and emergency maintenance.Lao roads currently face accelerated wear, particularly from climate impacts and heavy trucks, which alongside fragmented maintenance efforts, insufficient weight controls, and a lack of targeted investment, have resulted in deteriorating road conditions, rising lifecycle costs, and increased vulnerability to climate-related hazards.The report details a unified asset management system and preservation strategies that can arrest further decline.It gives clear recommendations for stabilizing revenues to fund road repairs and improvements, for protecting priority road assets through spending plans and better overloading controls, and improving governance and efficiency with higher quality assurance and transparency.

05 Dec, 2025

Laos-China Railway Marks Fourth Anniversary with Record Growth

The Laos-China Railway (LCR) marked four years of operation on 3 December, highlighting its transformative role in turning Laos from a “landlocked” nation into a “land-linked” regional transport hub since its launch in 2021. The railway, as part of China’s Belt and Road Initiative (BRI), has transported over 62.5 million passengers and carried more than 72.5 million tons of cargo so far, state media reported. Cargo Operations Expand DramaticallyRailway cargo operations have expanded significantly, growing from 2 to 23 daily routes over the past four years. The network has transported over 60,000 cargo trips, delivering goods to 19 countries and regions including Laos, Thailand, and Vietnam. More than 3,800 types of goods are now transported along the railway corridor.Advanced digital cargo stations and streamlined customs procedures have improved efficiency, slashing transit times from 40 hours to just 2 to 5 hours. Transport costs have fallen by 30 to 50 percent, making the route increasingly competitive for regional trade.In a milestone for agricultural exports, Laos shipped its first full train load of 1,000 tons of locally produced cassava starch to China via the LCR on 29 November.Tourism and Passenger Services SurgeInternational passenger services have also expanded substantially, with train capacity increasing from 250 to 420 seats per trip. Travelling times are now over 15 hours shorter compared to road travel, benefiting tourism, education, and cross-border business activities.The railway has connected popular destinations including Kunming and Xishuangbanna in China with Luang Prabang and Vientiane in Laos, spurring development of hotels, restaurants, and markets along the route. Regional IntegrationOn a similar development on 2 December, Laos and Thailand have just opened a freight train route connecting Thanaleng Dry Port in Vientiane Capital with Thailand’s Nong Khai Station. Future expansion plans include the Laos-Thailand Railway , which will connect to the LCR through a planned new railway bridge crossing the Mekong River between Vientiane and Nong Khai, set to become the second friendship bridge linking the two cities.