ASEAN finance leaders end meetings in Laos, pointing to challenges from geopolitics, volatile prices

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Association Of Southeast Asian Nations,Hospitality And Leisure Industry,General News

Southest Asian finance ministers and central bank governors have ended meetings in the Laotian city of Luang Prabang citing progress in building stronger regional institutions, but also noting serious challenges due to geopolitical tensions and volatile commodity prices.

Farmers tend their fields in stifling temperatures as surrounding hills are choked by smoke from field and hill fires across the region, Thursday, April 4, 2024, in Luang Prabang, Laos. Financial officials of the Association of Southeast Asian Nations were meeting in the city to discuss ways to secure financing to help shift to more sustainable and less polluting agriculture and energy.

“Nevertheless, there are still challenges due to adverse financial spillovers from geopolitical tensions, volatility in global commodity prices,” Phomvihane said, also pointing to climate change, aging populations and rapid development of digitalization as key factors for the region. In terms of U.S. dollars Laos’ economy is shrinking due to the devaluation of its currency, the kip. However, in local currency terms it grew at a 3.7% rate last year and is forecast to expand at a 4% rate in 2024.

Chinese financial institutions are believed to have rescheduled payments for about $2 billion in those debts since 2020, helping Laos to avoid an outright default and relieving some pressure on the economy. “They realize they have a problem and are open to help. They are inviting you to the kitchen and it means a lot,” he said.

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