In this article, we will take a look at 15 of the fastest growing economies in the world.
Countries with fast growing economies are countries whose real GDP is increasing substantially above the average. With a fast growing economy, more goods and services are produced in a country and the country as a whole becomes wealthier.
The IMF explains real GDP, “One thing people want to know about an economy is whether its total output of goods and services is growing or shrinking. But because GDP is collected at current, or nominal, prices, one cannot compare two periods without making adjustments for inflation. To determine “real” GDP, its nominal value must be adjusted to take into account price changes to allow us to see whether the value of output has gone up because more is being produced or simply because prices have increased. A statistical tool called the price deflator is used to adjust GDP from nominal to constant prices.
GDP is important because it gives information about the size of the economy and how an economy is performing. The growth rate of real GDP is often used as an indicator of the general health of the economy. In broad terms, an increase in real GDP is interpreted as a sign that the economy is doing well. When real GDP is growing strongly, employment is likely to be increasing as companies hire more workers for their factories and people have more money in their pockets.”
In terms of global growth, the IMF wrote in October that it expects global growth in real GDP to slow from 6% in 2021 to 3.2% in 2022 and 2.7% in 2023. Real GDP growth in 2021 was higher than average due to the pandemic rebound.
For all of the countries on our 15 Fastest Growing Economies in the World in 2022 list, each is growing faster than 3.2% in terms of real GDP growth for 2022.
Developing Countries
Given the high inflation this year, the U.S. Federal Reserve has had to raise interest rates six times in 2022.
As a result, U.S. Treasury yields have increased substantially. As of 11/10, the 3 month U.S. Treasury yield is 4.16%, up 412 basis points in one year. The 2 year U.S. Treasury yield is 4.33%, up 382 basis points in one year. Meanwhile the 10 year U.S. Treasury yield is 3.81%, up 226 basis points in one year.
Although inflation in the United States recently rose less than expected, American bond yields could be higher than the average for a period of time. As a result of the higher Treasury yields, a lot of capital has flowed back into the United States from developing nations. Growth around the world has slowed as a result.
Nevertheless, some countries have been able to expand their real economies despite the headwinds, with several expanding quickly thanks to a rebound in tourism. Several other countries have benefited from higher oil prices.
Many countries on our 15 Fastest Growing Economies in the World in 2022 list are also developing countries that have a naturally faster potential growth rate at their stage of development. It’s generally easier for economies that are still developing to grow faster than it is for fully developed countries to grow. While developed countries have to innovate near the cutting edge in technology or other sectors to expand their economies, countries that aren’t fully developed can take what works in developed countries and apply it to their countries.
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Methodology
For our list of 15 Fastest Growing Economies in the World in 2022, we took the top 15 fastest growing economies from the IMF’s real GDP growth 2022 list.
The IMF, otherwise known as the International Monetary Fund, is ‘an organization of 190 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world’.
15 Fastest Growing Economies in the World in 2022
15. Panama
Real GDP growth in 2022 According to IMF: 7.5%
Due to the pandemic, Panama’s GDP declined by 17.9% as construction was halted for several months and airports were closed for a period of time. Although GDP rose 15.3% in 2021, the country’s GDP didn’t reach the same level as it did prior to the pandemic. Given the country’s potential rate of GDP growth and the catch-up growth left from the pandemic recovery, Panama’s economy is expected to grow around 7.5% this year.
14. Saudi Arabia
Real GDP growth in 2022 According to IMF: 7.6%
Given Russia is a big exporter of oil and relations between Russia and the West aren’t good right now, energy prices have increased in 2022 from 2021. As one of the leading exporters of oil, Saudi Arabia has benefited from the higher prices with more exports. Given the export boost and its internal organic GDP growth rate, Saudi Arabia’s economy is expected to expand by 7.6% in 2022.
13. Colombia
Real GDP growth in 2022 According to IMF: 7.6%
Colombia’s economy is expected to expand 7.6% this year given the continued consumption recovery from the pandemic. With strong domestic demand, in addition to the government’s prudent macroeconomic and fiscal management, Colombia’s middle class is expected to continue to expand this year and for the future.
12. The Bahamas
Real GDP growth in 2022 According to IMF: 8%
The Bahamas’s real GDP is expected to rise 8% in 2022 as tourist arrivals rebound due to easing vaccination efforts and the easing of travel restrictions. Construction is expected to increase in the country as well. According to the World Bank in October 22, the Bahamas’s real GDP growth is expected to slow to 4.1% in 2023 as capital investment decreases to its pre-pandemic levels.
11. Maldives
Real GDP growth in 2022 According to IMF: 8.7%
Maldives, a country with around 550,000 people across 185 islands in South Asia, is expected to grow substantially this year thanks to a faster than expected rebound in tourism. Although inflation is a headwind, Maldives’ economy is expected to grow 8.1% on average in the 2023-2024 period. For 2022, the IMF estimates that the country could grow its real GDP by 8.7% although a recent economic update indicates that there’s potential for even faster growth this year.
10. Kuwait
Real GDP growth in 2022 According to IMF: 8.7%
In 2021, Covid-19 caused Kuwait’s economy to contract 8.9%. With a rebound in domestic consumption, the country’s economy exited a two year recession in 2021 with an estimated real GDP growth of 2.3%. Like Saudi Arabia, Kuwait has benefited from higher oil prices in 2022. Given the country is pretty small and has a current production capacity of 3.15 million barrels per day, Kuwait has substantial amounts of oil to export. Given its production, oil accounts for 95% of the country’s exports and around half of its GDP. The IMF expects Kuwait’s real GDP to rise 8.7% in 2022.
9. Ireland
Real GDP growth in 2022 According to IMF: 9%
According to the IMF, Ireland’s economy is expected to expand 9% in 2022, which would be a great achievement given that the country is already one of the wealthiest in the world in terms of GDP per capita. One reason for the fast expansion could be the rebound from the pandemic. Given Ireland is already a developed country, the country’s growth might not be substantially higher than the average in the future.
8. Georgia
Real GDP growth in 2022 According to IMF: 9%
With a 2021 GDP per capita of $5,039.4, Georgia has substantial growth potential as it develops. Although inflation remains a headwind for the country, the IMF expects Georgia’s economy to expand by 9% this year. The country is also expected to grow 4% in 2023, which would probably be even higher if it weren’t for the expected global economic slowdown next year.
7. Saint Lucia
Real GDP growth in 2022 According to IMF: 9.1%
Saint Lucia is an Eastern Caribbean island with scenic beaches and luxury resorts. Given Saint Lucia’s economy was heavily impacted by the pandemic with the decline in tourism in 2020, the IMF expects the country’s economy to expand 9.1% this year as tourism rebounds. The expected real GDP growth rate ranks Saint Lucia #7 on our list of 15 Fastest Growing Economies in the World in 2022.
6. Iraq
Real GDP growth in 2022 According to IMF: 9.3%
Like Saudi Arabia and Kuwait, Iraq is a major producer of oil with crude oil production capacity of around 4.6 million barrels per day. With higher oil prices in 2022, Iraq’s economy has benefited and is expected to expand by 9.3% as a result. Given its 2022 expected growth rate, the country ranks #6 on our list of 15 Fastest Growing Economies in the World in 2022.
5. Saint Kitts and Nevis
Real GDP growth in 2022 According to IMF: 9.8%
Due to the pandemic, Saint Kitts and Nevis’ economy contracted substantially in 2020 as tourism which accounts for around 60% of the country’s GDP weakened substantially. Given that tourism has rebounded since 2020, however, the economy of Saint Kitts and Nevis has also rebounded. According to IMF estimates, the economy of Saint Kitts and Nevis could grow 9.8% this year, ranking the country #5 on our list of 15 Fastest Growing Economies in the World in 2022.
4. Barbados
Real GDP growth in 2022 According to IMF: 10.5%
Like other tourism destinations, Barbados’ economy is expected to benefit from the rebound in tourism in 2022. Due to the pandemic, the economy of the island, which is the largest in the Eastern Caribbean, contracted by 18%. In 2021, Barbados’ economy began to recover with 1.4% growth, and the IMF expects the island’s real GDP to expand by 10.5% in 2022. In terms of the future, the U.S. State Department describes the opportunities for Barbados,
The country’s services sector continues to hold the largest growth potential, especially in the areas of international financial services, information technology, global education services, health, and cultural services. The gradual decline of the sugar industry has opened land for other agricultural uses. Investment opportunities exist in the areas of agricultural processing and alternative and renewable energy. Uncertainty about the trajectory of economic recovery of the tourism, commercial aviation, and cruise industries impacts the potential for projects in those sectors. The government has identified renewable energy and climate resilience projects as top priorities. In 2021, Barbados joined the Organization of Economic Cooperation and Development (OECD) framework seeking to harmonize global corporate minimum tax rates at 15 percent.
3. Seychelles
Real GDP growth in 2022 According to IMF: 10.9%
The IMF expects the real GDP of Seychelles to grow 10.9% in 2022, ranking the nation of 115 islands in the Indian Ocean #3 on our list of 15 Fastest Growing Economies in the World in 2022. One reason for the strong expected growth is the rebound in tourism. The country’s economy is also expected to grow 5.4% in 2023.
2. Fiji
Real GDP growth in 2022 According to IMF: 12.5%
As a nation with over 300 islands in the South Pacific, Fiji is a tourism destination whose economy is expected to expand by 12.5% this year thanks to the rebound in tourism due to the easing of Covid-19 restrictions. Unlike many other countries, inflation is also expected to be relatively moderate in Fiji at 4.8% for 2022.
1. Guyana
Real GDP growth in 2022 According to IMF: 57.8%
With an expected real GDP growth rate of 57.8% in 2022, Guyana ranks #1 on our list of 15 Fastest Growing Economies in the World in 2022. The World Bank describes the country,
The Co-operative Republic of Guyana is a small, sparsely populated South American country with abundant natural resources. The country is endowed with fertile agricultural lands, valuable mineral resources including bauxite and gold, extensive tropical forests that cover 80 percent of the country, and recently discovered large offshore oil and gas reserves.
The World Bank also describes why the country is expected to grow substantially this year,
Guyana’s economy is expanding at an extraordinary rate, fueled primarily by the expansion of oil output and is expected to remain one of the world’s fastest-growing economies in the medium term. Oil production, and consequently real GDP, is expected to jump in 2022 with real GDP expected to more than double by 2023, pushing per capita income to over US$20,000 at the current nominal exchange rate.
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Disclosure: None. 15 Fastest Growing Economies in the World in 2022 is originally published on Insider Monkey.
