Economic recovery in Laos will be a long road
time to restore the business sector, it will slow economic growth, and the two are interlinked. There will be fewer job opportunities which could lead to social problems such as mental illness and increased theft because people are unable to earn an income but still have many responsibilities.
It is expected that economic recovery in Laos could take two or three years or longer. This is not only dependent on the local situation but also on external circumstances. As a net importer, Laos’ economy is closely linked with other regions. If the Covid-19 pandemic continues to spread in surrounding countries and other regions, it will have an even greater impact on domestic production for export, tourism, and airlines in Laos because of the country’s overseas connections.
An important factor in the revival of businesses and the economy is assistance from banks, tax relief, cuts in electricity and water rates, and support from other sectors. The government has already announced that it will relax or postpone tax payments. At the same time, the Bank of the Lao PDR has advised commercial banks and financial institutions to devise policies that will ease the burden on businesses.
These forms of support are essential mechanisms in giving businesses the opportunity they need to rebuild. However, the authorities must urgently monitor the effectiveness of such measures to ensure that businesses are able to quickly resume operations and employ a large number of people to meet the needs of the production base.
In addition, the authorities must be prepared to cope with natural disasters such as drought and possible flooding in the rainy season. Many parts of the country are currently suffering from drought conditions. Drought and floods are a real threat and may create further economic hardship, which would mean it could take even longer to get back on the road to economic growth and prosperity.