The year 2023 saw Laos drifting through its most severe economic and fiscal crisis since the late 1970s. According to recent estimates, public debt has reached a staggering 123 per cent of GDP. Ongoing currency depreciation and rampant inflation plagued the population. This crisis laid bare the country's macroeconomic vulnerabilities and had negative impacts on already pressing problems such as environmental degradation, economic and legal inequalities, and precarious labour migration. To mitigate the economic woes, the ruling Lao People's Revolutionary Party (LPRP) has initiated a number of fiscal measures, the effectiveness of which remains to be seen.

On the surface, everyday life in the cities appears like business as usual. Construction projects fuelled by Chinese or Vietnamese investment keep operating. But in conversations with local people, the foreign observer can sense disillusionment and uncertainty. In the capital city Vientiane, civil servants and skilled workers look for second jobs to cope with the price hikes of key commodities such as food and petrol. Petty corruption is on the rise again despite attempts by state authorities to enforce anti-corruption laws. Luang Prabang is experiencing a fresh tourism boom, which indeed nurtures hopes for new economic opportunities. The rural population, meanwhile, faces precariousness and insecurity because of inflation, land acquisition and environmental risks.

On the positive side, the Laos–China Railway (LCR) performed well and raised hope for new commercial dynamics (while the social and environmental costs of large-scale infrastructure construction also became evident). With the Covid-19 crisis having petered out, the tourism sector has gained momentum this year, seeing an estimated three million visitors. Chinese tourists and businesspeople were crossing the border again, embodying the ambiguous nature of Chinese influence in Laos, which is perceived both as a catalyst of economic development and as a domineering force. At the same time, the spectre of the Chinese “debt trap” was looming large, dominating international media coverage. As in the previous year, Laos in 2023 was still far removed from any “post-pandemic bounce”.