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It may sound perverse to say – given that inflation in Laos has been at one of the highest rates in Asia since 2022, the national debt stands at more than 130 percent of GDP – but the second-poorest nation in Southeast Asia has many reasons for optimism.
Tourism is likely to return to pre-pandemic levels this year. Its ASEAN chairmanship this year is greatly boosting its international profile—and, thus, international trade prospects.
Vientiane has sensibly bet on food exports to China, since China’s demographics are arguably the worst in the world and is set to have the fastest population decline in human history. Even today, China cannot feed itself. It imports around 65.8 percent of all foodstuff.
Although that was down from 93.6 percent in 2000, external demand is likely to rise in the coming years as its working-age population collapses, forcing even more rural folk into the cities and industries.
It is therefore a solid bet by Vientiane that agriculture exports to China will grow in the coming decades. Its exports increased to $1.4 billion in 2023, up by a quarter from the previous year.
The Vientiane-Kunming railway has already expanded export opportunities into China. If Laos can attract interest from consumers further west, in Central Asia and Europe, it can use the railway links through China to increase trade.
Better still, if Laos can extend its rail network down to Thailand’s ports, again thanks to Chinese investment, that would make it easier and cheaper to export its goods further afield.
Better than that, Vietnam has pledged to connect Laos via railways to its port in Vung Ang, which would make it easier for trans-Pacific exports, opening up Laos’ producers to the U.S. market.
Politically, too, the communist Lao People’s Revolutionary Party can be confident in its own monopoly on power. There is no meaningful resistance group among the diaspora or at home. Unlike communist Vietnam, there is nothing like a pro-democracy movement.
Perhaps most heartening for Vientiane, and something often overlooked, Laos has the youngest population of all the ASEAN states and the healthiest-looking demographics over the coming three decades.
Just 4.7 percent of the population is aged above 65. Some 65.4 percent are of working age (15-64) and 29.9 percent are below the age of 15. By 2050, the working age population will actually grow to 68 percent, while just a tenth will be of retirement age by that year.
Aged versus aging societies
By comparison, in 2050, a fifth of Vietnam’s population will be aged 65 and over. In Thailand it will be around a third.
Laos won’t become an “aging society” – when 7 percent of the population is aged above 65 – until 2035. It won’t become an “aged society” – when the over-65 cohort is above 14 percent) – until 2059. One reason for this, however, is the country’s shorter life expectancy.
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