286 THE IMPACT OF GLOBAL FINANCIAL CRISIS ON LAO ECONOMY
Conclusions
This paper attempts to examine the impact of GFC on the Lao economy. The GFC affects the Lao economy through various routes, but this study focuses on the declining demand. The preliminary conclusions are as follows.
The GFC has a negative impact on the Lao economy, shown by declining household welfare (EV) and real GDP. The output of some sectors also declines from the impact of GFC. Therefore, the author concludes that the GFC has the negative impact on Laos. However, the impact seems to be small. Therefore, it is important for policy maker to consider prudent and effective stimulate package response to this shock as macro-economic condition of Laos is quite weak.
However, this study is characterized by several weaknesses. First, it uses a static GTAP model, which does not reflect the real impact of the GFC. Second, this study limits the impact of the GFC to the declining world demand and does not include declining FDI, remittances, tourism and government revenue in assessing the impact of the GFC.