Vientiane (VNA) – The Lao economy is expected torecover in 2023 thanks to measures to increase new investment and enhance theproduction of renewable energy and mining activities, according to the AsianDevelopment Bank (ADB).

A consortium of lenders is preparing finance for the600-megawatt Monsoon Wind project which, once completed, will export all thepower it generates and be Southeast Asia’s biggest wind energy project, statedan update in ADB’s flagship publication, Asian Development Outlook (ADO) 2022.

Energy exports will remain robust with seven hydropowerprojects scheduled to come online in 2022, adding 4.1 billion kilowatt hours toLaos’ export earnings. The current account deficit is expected to narrow to theequivalent of 4.5% of GDP from 5% in 2021 on buoyant export growth outpacingimports, it said.

The ADB also stated that a recovery in domestic demand isexpected to stimulate imports of capital and consumer goods in 2023, wideningthe current account deficit to 5.5%.

However, the ADB has lowered its 2022 economic growthoutlook for Laos to 2.5% from 3.4% projected in April and to 3.5% from 3.7% for2023.

The ADB significantly revised its forecast for inflation upto 17% for 2022 on higher-than-expected oil prices and the weaker kip.

The year-on-year inflation rate increased from 30.01% recorded in August to 34% in September, according to the latestreport from the Lao Statistics Bureau.

Inflation next year is expected to moderate to 4.5% on lowerglobal oil prices.

Low interest loans for local food producers to buyagriculture inputs should help boost domestic food production and relievepressure on food prices, according to the ADB.

The downgraded economic growth forecast comes amid sluggishglobal demand and the tightening of monetary policy to manage inflation./.