Remittances in Laos are projected to decline by about 50 percent in 2020 as a result of the economic crisis triggered by the COVID-19 pandemic, local daily Vientiane Times quoted a senior economist as saying.
Chairman of the National Assembly's Planning, Finance and Audit Committee and economist Leeber Leebouapao told Vientiane Times on Monday that the remittances form a major part in the Lao economy and poverty reduction efforts.
"More than 100,000 Lao migrant workers have returned home as a result of the COVID-19 epidemic," he said. "A majority of Lao laborers work in Thailand and the rest work in South Korea and Japan."
According to the latest edition of the World Bank's Lao Economic Monitor unveiled in June this year, the COVID-19 pandemic is adversely impacting the flow of remittances and could push as many as 214,000 people into poverty in Laos which has a population of around 7 million.
The World Bank said that since the outbreak, thousands of Lao workers have returned, resulting in an estimated reduction of up to 125 million U.S. dollars, or 0.7 percent, of gross domestic product (GDP) in remittances in 2020.
Around 9 percent of households in Laos receive remittances from abroad, and remittances constitute 60 percent of their household income, according to the World Bank report. Due to the significant reduction in recipient household incomes, the poverty is expected to rise by 1.4 to 3.1 percentage points in 2020.
"The impact of the pandemic on poverty is expected to linger, with poverty projected to return to its pre-crisis level in 2021 under the upside scenario, or later than 2022 under the downside scenario," said the report.
Remittances constitute the money sent home by individuals working abroad to their family and friends. Most Low-income countries, including Laos, depend on remittances to boost their GDP growth.
In 2020, the global remittances are estimated to drop by 20 percent due to the COVID-19 pandemic.
A majority of Lao migrants regard remittances as an important source of income for their families, and many of them send money back home every month. Recipient families used remittances to build houses, sending children to schools and paying for healthcare.