According to the Lao PDR Expenditure and Consumption Survey (LECS) of 2012/13, the national poverty headcount rate has declined by about 50% since 1992/31 - 23.2% (from 33.5% in 1992/93) of the population still living under the federal poverty line, and as many as about 80 per cent of the population still lives dangerously close to the poverty line (under USD 2.50 per day) with a 10% likelihood of falling back into poverty without a shock of the COVID-19 pandemic’s magnitude.2 Akin to trends elsewhere, poverty tends to be concentrated in rural areas, with specific ethnic dimensions. The poverty rate is the highest among the Mon-Khmer (42.3 per cent) and Hmonglu-Mien (39.8 per cent) ethnic groups.

In households where livelihoods are severely affected, the COVID-19 shock could enhance the intergenerational transmission of poverty in two ways. First, as a coping strategy, caregivers could be forced to reduce spending on children’s education and health. Given the centrality of education for labour productivity and finding employment in the formal economy, these shocks could increase the number of children experiencing multidimensional poverty and reinforce poverty traps. Children who are born into poverty often face layers of suffering such as malnutrition, illness, and limited social capital. This makes upward social mobility extremely difficult, and in the absence of adequate social welfare nets, poverty tends to reproduce itself.