Robust growth has helped to nearly halve poverty in the Lao People’s Democratic Republic (Lao PDR). Investments in mining and hydropower in recent years have driven much of the growth of the economy. However, the economic transformation continues to pose challenges for the country. Continued structural transformation and economic diversification is needed to expand opportunities, provide jobs for a young population, and for growth to become more inclusive. At the same time, high economic growth will need improved natural resource and environmental management.

ADB's new country partnership strategy, 2012–2016, for Lao PDR is designed to help the government diversify the economy in a sustainable inclusive manner, through operations in agriculture and natural resources, education, energy, water supply and other municipal infrastructure and services, and public sector management.