Laos People’s Democratic Republic (Laos P. D. R.) is a landlocked country located in South East Asia home to a population of 6.2 million. Independence from France was obtained in 1949. Laos with one of the world’s last few remaining Communist governments is a member of ASEAN (1997).
Economic Statistics
Total GDP as measured by purchasing power parity stands at $12 billion USD (2005) with corresponding GDP/Capita at $1,900 USD. Total GDP as measured by market prices is at $2.6 billion USD. GDP growth 2005 at 7.3 percent, year 2003 at 5.25 percent, year 2006 is estimated at 7 percent. Inflation quotes include year 1998 at 142 percent, 1999 at 100 percent, 2000 falling to 23.2 percent, 2005 at 9.4 percent, September 2005 inflation at 7.5 percent, 2006 projected to decline to 5 percent. The fiscal deficit came in at 3.9 percent of GDP (2005). Foreign exchange reserves were measured at $217 million USD (August 2005). The current account is almost balanced, very slight deficit. Subsistence agriculture at 50 percent of output employing 80 percent of the labor force.
CURRENCY: ISO Symbol ‘LAK’, Laotian New Kip. At time of review on February 16, 2006, the New Kip had an exchange valuation at 10471 LAK to the US-dollar (USD) and/or 12434 LAK to the Euroland euro (EUR). In September 1995, Laos adopted a floating exchange rate regime, presently a managed float. During 2005, the New Kip has traded in a stable range. Coinage is presently not in use within Laos.
CURRENCY HISTORY: the Kip came into circulation in 1952. By 1979, 100 Old Kip was replaced by 1 New Kip. During the 1997-98 Asian financial crisis, the New Kip crashed in value upwards of 90 percent to the USD. Historical exchange quotes include year 2005 at 10751 LAK to the US-dollar (USD), 2004 at 10820, 2003 at 10569, 2002 at 10056, 2001 at 8954, January 2000 at 7674, 1999 at 7102, 1998 at 3298, 1997 at 1259, 1996 at 921, 1995 at 804, 1994 at 717 and year 1993 at 716. The nation’s Central Bank, Bank of Lao P.D.R. was established in 1990 to help the transition of the financial sector to further market reforms after the liberalization of foreign investment laws began in 1986.
CURRENCY FORECAST: the New Kip remains vulnerable as a small open economy home to a primitive infrastructure, the Laotian economy may again overreact to another large external macro-economic shock similar to what took place in 1997-98. There is a potential to increase electricity exports for Laos - hydropower markets to Thailand. In addition, a tremendous mining potential exists for Laos in areas of gold, copper as several international mining companies are presently exploring. Finally, Laos does have further potential in a growing tourism industry. Risks to the LAK include security issues – illegal production of opium for markets in the global drug trade. No oil production, foreign aid recipient.
