The Lao economy is expected to remain strong in 2011-12 as private investment in the country surges. The World Bank projects growth of 8.6% in 2011, compared with its estimate of 8.4% for 2010. Natural resources will account for around 3.6% of this growth, but manufacturing is expected to make a greater contribution this year, of about 1%. Growth of 15-20% is expected in garment exports, owing to the relaxation of raw-material sourcing requirements in the EU. The service sector, especially the transport and tourism segments, is also expanding, and the Bank expects it to add around 2.5 percentage points to the rate of annual GDP growth in 2011. Higher regional demand for food, with ensuing higher prices, should benefit agriculture, which the Bank predicts will contribute another percentage point to growth. The ADB is more modest with its forecast, calculating that GDP growth will accelerate from 7.5% in 2010 to 7.7% in 2011 and 7.8% in 2012. The Lao government projects growth of 8% in 2011.

According to the planning and investment ministry, the government approved 188 private domestic and foreign investment projects over the first six months of fiscal year 2010/11 (October-September), with a value of about US$1bn. Private investment has therefore already reached 84% of the target for the fiscal year. Around 35%, or US$351m, of the approved investment value came from domestic private investment while the rest came from foreign firms. Following efforts to shift focus away from natural resources, the top investment sector in the past six months has been services, including hotels and banks, with investments totalling US$434m. The second-largest sector was agriculture, with US$195m, and the third was mining, with US$55m. Thongsing announced in April that the economy was on track to grow by 8.5% in 2010/11.