04 Feb, 2026

Laos Targets Upper-Middle-Income Status by 2035 Through Growth and Fiscal Reform

The Lao government has reaffirmed its long-term development ambitions, linking sustained economic growth and tighter fiscal management to a goal of reaching upper-middle-income status by 2035.Speaking at the 2025 financial performance review and 2026 policy direction meeting on 29 January, Minister of Finance Santiphap Phomvihane told state media that Laos aims to reach upper-middle-income status by 2035, with per capita income of USD 4,600–5,000.For comparison, while official income data by province is not publicly available, Vientiane Capital currently records the country’s highest GDP per capita, at LAK 85.17 million (approximately USD 3,957), with levels in other provinces remaining significantly lower.According to the minister, the government plans to sustain average economic growth of 6–7 percent over the coming decade to meet this target. The strategy aligns with national socio-economic development plans and the country’s long-term development vision.To support the transition, authorities plan to restructure the economy by prioritizing seven key sectors identified as major growth drivers. These sectors are expected to improve productivity, expand the economic base, and raise household incomes.Fiscal reform will play a central role in the strategy. For 2026, state revenue is projected at 20.02 percent of GDP, supported by measures to broaden the tax base, strengthen revenue collection, reduce non-compliant tax exemptions, and expand the use of digital systems in tax administration. On the spending side, the government plans to tighten budget controls and strengthen oversight from planning through auditing.Past performanceOfficials also highlighted progress under the National Socio-Economic Development Plan (2021–2025). Laos recorded economic growth of 4.8 percent in 2025, with average growth of 4.24 percent over the five-year period. Inflation eased to around 8.8 percent, while macroeconomic stability improved and poverty levels declined in line with national targets.Building on these gains, authorities said sustained reforms, disciplined fiscal management, and steady growth in priority sectors will be critical for Laos to achieve its 2035 income goal and move into the upper-middle-income category.

30 Jan, 2026

Laos Inflation Eases to 5.1 Percent in January 2026 as Utility Costs Drive Price Pressures

Laos recorded an inflation rate of 5.1 percent in January 2026, down from 5.6 percent in December 2025, as the country continues to grapple with elevated price pressures driven primarily by utility costs, according to official data.The consumer price index (CPI) stood at 256.8 in January 2026, slightly lower than 257.2 of December 2025 but significantly higher than the 244.2 recorded in January 2025, indicating sustained year-on-year price growth.Utilities Remain Primary DriverThe housing, water, electricity, and cooking fuel category emerged as the primary driver of inflation, surging 24.2 percent year-on-year. This sharp increase was fueled by a dramatic 169.1 percent spike in electricity prices and a 42.7 percent rise in water supply costs, placing significant pressure on household budgets.Other categories also experienced substantial price increases. Healthcare and medicine climbed 13.6 percent, education rose 11.5 percent, and miscellaneous goods and services surged 32.1 percent. Alcohol and tobacco products increased 8.3 percent, while clothing and footwear advanced 7.6 percent.On a month-on-month basis, overall prices declined 0.2 percent in January. Food and non-alcoholic beverages fell 1.2 percent due to lower vegetable prices, while fuel prices decreased 3.2 percent.Laos’ overall inflation rate for 2025 stood at 7.7 percent, down from 23.13 percent in 2024. Under its 10th Five-Year National Socio-Economic Development Plan (2026-2030), the government has set a target to maintain inflation at around 5 percent annually.