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Macroeconomic Imbalance, External Debt, and the Financial System in Laos

Author

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  • Fumiharu Mieno
  • Kazue Demachi

Abstract

External public debt exacerbation and macroeconomic destabilization in Laos are attributed to the subsequent complications of excessive foreign capital investments in the mining, power, and transport infrastructure sectors during the economic boom of the 2010s. This study examines the Lao economy from three perspectives: real sector growth, the characteristics of external fundraising, and the domestic financial system. Our findings suggest that the external debt issue still appears to be under control, real sector growth is expected to be strong in the medium term, and the less‐developed financial system has not realized its potential for fiscal financing and macroeconomic stability.

Suggested Citation

  • Fumiharu Mieno & Kazue Demachi, 2024. "Macroeconomic Imbalance, External Debt, and the Financial System in Laos," Asian Economic Policy Review, Japan Center for Economic Research, vol. 19(2), pages 295-318, July.
    • Handle: RePEc:bla:asiapr:v:19:y:2024:i:2:p:295-318
    DOI: 10.1111/aepr.12469
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    References listed on IDEAS

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    1. World Bank, 2021. "International Debt Statistics 2022," World Bank Publications - Books, The World Bank Group, number 36289, April.
    2. Corden, W M, 1984. "Booming Sector and Dutch Disease Economics: Survey and Consolidation," Oxford Economic Papers, Oxford University Press, vol. 36(3), pages 359-380, November.
    3. Jayant Menon & Peter Warr, 2013. "Lao Economy: Capitalizing on Natural Resource Exports," Asian Economic Policy Review, Japan Center for Economic Research, vol. 8(1), pages 70-89, June.
    4. Keith Barney & Kanya Souksakoun, 2021. "Credit crunch: Chinese infrastructure lending and Lao sovereign debt," Asia and the Pacific Policy Studies, Wiley Blackwell, vol. 8(1), pages 94-113, January.
    5. Paul Collier & Benedikt Goderis, 2007. "Commodity Prices, Growth, and the Natural Resource Curse: Reconciling a Conundrum," CSAE Working Paper Series 2007-15, Centre for the Study of African Economies, University of Oxford.
    6. Maurice Obstfeld & Jay C. Shambaugh & Alan M. Taylor, 2010. "Financial Stability, the Trilemma, and International Reserves," American Economic Journal: Macroeconomics, American Economic Association, vol. 2(2), pages 57-94, April.
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    Cited by:

    1. Souknilanh Keola, 2024. "Comment on “Macroeconomic Imbalance, External Debt, and Financial System in Laos”," Asian Economic Policy Review, Japan Center for Economic Research, vol. 19(2), pages 319-320, July.
    2. Toshiro Nishizawa, 2024. "Comment on “Macroeconomic Imbalance, External Debt, and the Financial System in Laos”," Asian Economic Policy Review, Japan Center for Economic Research, vol. 19(2), pages 321-322, July.
    3. Takatoshi Ito & Kazumasa Iwata & Colin McKenzie & Shujiro Urata, 2024. "ASEAN: Editors' Overview," Asian Economic Policy Review, Japan Center for Economic Research, vol. 19(2), pages 153-171, July.

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