Laos Says It’s Set to Benefit From the U.S.-China Trade War

(Bloomberg) --

Landlocked Laos may be a net beneficiary of the trade tension between the U.S. and China.

Chinese foreign-direct investment has climbed since the trade war began as firms seek alternative manufacturing sites to avoid U.S. tariffs, said Bank of the Lao P.D.R. Deputy Governor Vathana Dalaloy.

“We may gain more than we lose,” she said in an interview in Luang Prabang on Saturday, adding Laos isn’t “fully integrated” into the world economy in terms of exports.

Exports of goods and services account for about 34% of gross domestic product, significantly less than neighbors such as Vietnam and Cambodia, World Bank data show. This means the nation is relatively shielded from the global trade slowdown triggered by the U.S.-China spat.

Bank of the Lao P.D.R. expects economic growth of 6.4% this year, less than an earlier prediction of 6.7% because of flood damage.

Major infrastructure projects, such as the Laos-China railway, are supporting the expansion in Laos’ economy, along with sales of electricity to Thailand from hydro-power projects.

China has been the largest contributor of foreign-direct investment in the nation of seven million people, according to the World Investment Report by the United Nations.

Net investment inflows averaged 7.5% of GDP annually in the five years through 2018, up from 4.9% in the prior five-year period, World Bank figures show.

To contact the reporter on this story: Suttinee Yuvejwattana in Bangkok at suttinee1@bloomberg.net

To contact the editors responsible for this story: Sunil Jagtiani at sjagtiani@bloomberg.net, Yumi Teso

©2019 Bloomberg L.P.