VIENTIANE, April 9 (Xinhua) -- The Asian Development Bank (ADB) has forecast Laos' economic growth at 7.7 percent in 2013 and 2014, higher than the region's average. ADB's flagship annual economic publication, Asian Development Outlook 2013, released on Tuesday in Laos' capital city of Vientiane, identifies the electricity and mining sectors as the primary drivers of Laos' strong growth rate.
New hydropower projects commissioned in 2012 increased national output by more than 650 megawatts, with about 70 percent of all hydropower generated exported, mainly to Thailand, the report stated.
Chong Chi Nai, ADB country director, said Laos would benefit from starting to build its own 500 KV transmission lines for integration into the emerging Great Mekong sub-region power grid.
"A more efficient use of fossil fuels could be achieved by designing more compact, clean and green cities where transport can be arranged more efficiently," he added.
ADB Deputy Country Director for Laos Barend Frielink said Laos' gross domestic product (GDP) growth is on track to exceed growth in developing Asia, projected at 6.6 percent in 2013 and 6.7 percent in 2014.
However, Laos faces challenges such as rising inequality and inflation due to higher prices of imported goods and credit growth. Laos' inflation is projected to edge up to 5.5 percent in 2013 in light of buoyant domestic demand and higher salaries for government employees, the report said.
Other challenges for Laos identified by the ADB are achieving higher growth with stronger banking supervision, maintaining exchange rate and price stability. Tighter fiscal policies and stability, land management and natural resources maintenance are required to achieve higher growth.
The report also listed construction, increased rice output and rising tourist numbers as helpful for economic growth.
Established in 1966, ADB, based in Manila, the Philippines, is dedicated to reducing poverty in Asia and Pacific through inclusive economic growth, environmentally sustainable growth and regional integration.