Lao People's Democratic Republic

Supportive external conditions and domestic policy tightening helped stabilize economic imbalances and the exchange rate (ER), though policies have eased recently. Stronger-than-expected activity in key partner countries boosted GDP growth in 2024−25:Q3, and, along with Chinese debt service deferrals, resilient FDI and favorable terms of trade, strengthened external balances and reserve accumulation. Tight monetary and fiscal policies in 2025, and monetary policy framework reforms, eased ER pressures and allowed rapid disinflation. However, monetary policy was eased in 2025:Q4 and the fiscal stance is projected to ease in 2026 relative to the stronger-than-expected 2025 primary surplus.