Southeast Asia Information Port News, June 17th – The Lao Academy of Social and Economic Sciences and the Australian Embassy in Laos jointly held a seminar on “Enhancing Economic Resilience in the Context of Geoeconomics.” Economists at the seminar issued a warning: Affected by external shocks such as global geopolitical tensions and rising energy prices, Laos' economic growth and inflation prospects for 2026 are under pressure, and achieving its established targets may be difficult.
According to the macroeconomic assessment report released at the seminar, the Lao government has set an economic growth target of 5.5% for 2026, but experts predict that the actual growth rate will only be 4% to 4.6%, making the economic outlook more fragile. The macroeconomic vulnerability index has risen from an average of 0.50 to 0.63, indicating increased risks in multiple economic sectors.
Inflationary pressures are even more prominent. Import inflation continues to rise, with the relevant index rising from 3.7% in February to 10%-13% in April-May; data from the Lao Statistics Department shows that the inflation rate reached 9.0% in May. Economists predict that Laos' average inflation rate will reach 9.7% in 2026, potentially returning to double digits and significantly exceeding the government's target range of 5% (with a fluctuation of 2%).
Energy prices have become the primary source of risk. The ongoing conflict in the Middle East and the obstruction of the Strait of Hormuz have pushed global crude oil prices above $100 per barrel. It is estimated that the blockade of this passage has disrupted approximately 20% of global oil supply, with Saudi Arabia, Kuwait, and Iraq reducing production by a combined 7 million barrels per day. Due to the inelastic demand for oil, the supply contraction has directly driven a sharp price increase.
As a result, domestic diesel prices in Laos have surged by 182%, and gasoline prices rose by 91% in April, directly increasing transportation, manufacturing, and agricultural costs. Fertilizer and logistics prices have also risen simultaneously, further increasing food production costs and household expenses.
High costs are also impacting the tourism industry. Data shows that the number of tourists visiting Luang Prabang during the Lao New Year period decreased by 46% year-on-year, with rising travel and living costs being a significant contributing factor.
Professor Peter Waugh of the Australian National University pointed out that the repair and rebuilding of energy facilities and inventories in the Gulf region will take several months, making a significant drop in oil prices unlikely in the short term, with a low probability of prices falling back to $60 per barrel. Laos, heavily reliant on fuel imports, is particularly vulnerable to fluctuations in the global energy market.
Dr. Vansay Sayavong, Deputy Director of the Lao Institute of Macroeconomic Research, stated that external shocks continue to impact trade, investment, and consumer spending, making Laos' macroeconomic situation more fragile.
Dr. Viengsavang Thiphavong, a researcher at a research institution under the Lao Ministry of Industry and Commerce, along with experts from Australia and Laos, jointly recommended at the conference that Laos should accelerate efforts to improve energy security, expand investment in renewable energy, and diversify its energy import sources; simultaneously, it should accelerate the construction of transportation networks, improve border trade facilitation, promote electric vehicles, reduce dependence on imported fuels, and make fuller use of regional trade agreements to enhance its economic resilience.
Stabandit Insisienmai, Vice President of the Lao Academy of Social and Economic Sciences and Chairman of the Lao-Australia Friendship Association, stated that this seminar is an important part of Lao-Australia cooperation, aiming to deepen understanding of global geoeconomic challenges and response strategies.
Australian Ambassador to Laos, Megan Jones, stated that economic security and resilience are crucial; a robust and resilient economy can buffer external shocks, strengthen social foundations, and promote inclusive and sustainable growth.
Participants agreed that despite escalating external challenges, Laos can maintain stability and safeguard livelihoods in a global environment of uncertainty if timely and effective policies are implemented and economic resilience is continuously enhanced.
