Thailand's Commercial Attache at the Thai embassy in Vientiane says Laos’ exports to Thailand increased 53% during the fiscal year 2007-08, compared to that of 2006-07, with an aggregate value of more than 500 million U.S. dollars. However, Laos’ trade balance with Thailand remains in the red because imports from Thailand in the same fiscal year also increased 49%, worth more than US$ 800 million.
Thai officials say that with the growing ease of communications and transportation between the two countries, they expect bilateral trade will continue to expand in 2008-09 and beyond, bringing the total value up to US$2 billion by 2011.
Laos' exports to Thailand consist mainly of processed woods, agricultural products, apparels, and miningproducts including copper, coal and lignite. Its main imports include consumer goods, agricultural production materials and household items, constituting more than 60% of the country’s total imports.
The Kip, Laos' currency, has recently gained strength, roughly 10% against the Thai currency and 15% against the dollar. And according to Mr. Phouphet Khamphouvong, Governor of the Bank of the Lao PDR, theincrease in the Kip value against the US dollar and the Thai Baht has a negative impact on Laos’s exports. But at the same time, the strong Kip will enable Lao people to buy imported goods at lower prices. As an economy that relies on imports, this situation is likely to be rather beneficial to Laos, because it means cheaper imported goods for Lao consumers.
However, Laos stands to suffer a continued trade deficit with Thailand if its imports keeps expanding. Therefore, in order to improve trade balance, the Lao central bank plans to manage and control the kip value by not allowing it to increase more than 5% against the Baht and the dollar.
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