Lao PDR economic performance has continued to improve during 2006. Real GDP grew at 7.0 percent in 2005 and is now expected to be slightly higher at 7.3 percent in 2006. This growth is in large part due to foreign investment inflows in mining and hydro-power and growing mineral exports, but the share of non-mining contributions has increased this year, reaching 4.9 out of 7.3 percent. Agriculture, manufacturing and services sectors are expected to sustain growth, due to rising FDI in agriculture, manufacturing, and increasing trend in services (especially tourism). Inflation (of Consumer Price Index) has continued to remain in single digits: after rising early this year it has dropped remarkably during the last few months, to 5.5 percent in September and 3.7 percent in October 2006. This paper includes the following headings: introduction
part 1 recent economic developments -- the macroeconomic situation, elaboration and implementation of the Poverty Reduction Strategy
part 2 structural reforms -- public expenditure policy and management, reform of state-owned enterprises, financial sector reform, trade reform, and private sector development
and part 3 donor assistance to the reform agenda -- public sector governance
reform of state owned enterprises & financial sector
trade reform
and private sector, tourism development, and land reform.