Economies around the world are emerging from the depths of the COVID-19 pandemic and entering a period of recovery and, hopefully, increased growth. Some nations are projected to grow their economies at rates much faster than others. Looking ahead, these are the nations that are poised for the fastest overall economic growth.
How Economic Growth Is Measured
National economic growth is measured in increases in real GDP, that is, the total value of all goods and services produced in the nation modified by price changes to account for inflationary impact. A strong trend emerges when looking at fast-growing economies. Those that are most economically complex tend to grow faster than others. Economic complexity is determined by diversity and sophistication of a nation’s production capabilities as they relate to that nation’s exports. Nations with considerable diversity in their exports, and those whose exports require specialized skills to produce rank higher in economic complexity than nations that rely on few export commodities, or simple natural resources like oil.
Overall, the COVID-19 pandemic had little effect on the complexity of each nation’s economy. The fastest-growing economies, and those that are the most complex, are located in East Asia, Europe, and the United States. In regards to Europe, Eastern Europe is the fastest-growing region, as the economies of that area are fully mature and have expanded from the decades-long disasters that resulted from Communism. Sub-Saharan Africa, as a region, has experienced some of the greatest drops in economic complexity over the last decade. Eastern Africa and Latin America have also suffered in this respect, and are projected to continue to struggle to diversify and modernize their economic base.
The area most strongly affected by the pandemic was the service industry. In a break from previous economic downturns, the service industry suffered massive disruptions exceeding that of goods. Tourism and travel became nearly non-existent for almost two years, and countries whose economic well-being depended on those industries were extremely hard hit. Again, countries with complex economies, like Thailand for example, were best able to weather the massive reduction in tourism. Other nations with less complex economies were not so lucky.
China An Economic Powerhouse
So, with all of the above taken into account, what are the fastest-growing economies across the world? Well, some of the usual suspects are at or near the top. China remains a fast-growing economic powerhouse, despite the considerable slowing-down of its growth even before the pandemic. China has such a diverse and complex economy that it has the flexibility necessary to navigate through economic tough times. Most projections have the Chinese economy continuing to be strong and expanding in the next decade.
Throughout the rest of East Asia, however, China is getting serious competition in terms of economic growth. Vietnam has spent considerable resources to diversify its economic base and compete directly with their much larger neighbor. The other nations of Indo-China are Laos and Cambodia. These two countries are less advanced than Vietnam, but are seeing some of the highest levels of growth among developing nations.
These countries are joined by both South Korea and the Philippines. These two nations improved their economic standing over the last decade to an incredible degree. Japan’s growth remains strong, as does the small nation of Singapore. There are warning signs in the region, though, as tensions between various nations threaten the peace and could result in economic chaos if they boil over into actual armed conflict.
Saudi Arabia was a big winner in the post-pandemic period. The Kingdom suffered mightily during the worst of COVID-19 due to the steep decline in demand for its major export, oil. However, as the world recovered from the enforced lockdowns, energy prices surged and Saudi Arabia has reaped the rewards of the newfound demand. Russia’s war with the Ukraine, and the consequent economic sanctions imposed on it as a result, hurt one of the Saudi Arabia’s biggest oil exporting competitors. The Saudi government has also taken strides to diversify its economy so that it isn’t as reliant on the international oil market.
India Expected to Surpass China As the World’s Most Populous Nation
India is predicted to surpass China in 2023 as the world’s most populous nation. Its economic growth has followed its demographic growth and India is firmly established as one of the world’s fastest-growing economies. The massive human resources possessed by India, combined with considerable national resources and a major investment in diversification, make the country’s future fast growth inevitable.
East Asia and Eastern Europe are projected to be the regions with the fastest economic growth in the next decade. Unfortunately, their growth will be at the expense of many less-complex developing economies in Latin America and Sub-Saharan Africa. Of course, these trends could well change if continued conflict in the Ukraine and potential conflict in Asia raise tensions and result in economic sanctions or warfare. As of the moment, however, bet on East Asia and Eastern Europe to continue their rapid growth.
What Are the World’s Fastest-Growing Economies?
