In this article, we will be finding the fastest-declining economy in the world in 2024. Based on the average annual GDP growth rates of the past 5 years, we’ve also prepared the free full list of 15 Fastest-Declining Economies in the World in 2024.
The global economy is experiencing critical economic challenges as growth is projected to slow to 2.6% in 2024 which is just above the recession threshold of 2.5%. This marks the third consecutive year of subpar growth compared to the pre-pandemic average of 3.2%. Speaking of recession, Japan has recently slipped into the recession 2024 list of countries.
The country has unexpectedly entered a recession after its GDP shrank for two consecutive quarters. In Q4 2023, the economy contracted by 0.4% year-over-year, following a 3.3% decline in the previous quarter. Consequently, Japan has lost its position as the world’s third-largest economy to Germany, with Japan’s GDP at about $4.2 trillion and Germany’s at $4.4 trillion. Economists had anticipated a 1% growth for Japan in Q4. The yen’s 9% depreciation against the dollar in 2023 contributed to this shift, despite boosting Japanese export-competitiveness.
Apart from Japan, the United Kingdom has also been in the limelight for fighting the recession. According to Chancellor Jeremy Hunt, in terms of inflation, the UK currently boasts a lower rate compared to both the eurozone and the United States. However, despite this improvement, prices remain significantly higher than a year ago, with inflation measured at 2.3% in the UK, 3.4% in the US, and 2.4% in the eurozone.
Regarding growth projections, the IMF forecasts that the UK economy will outpace several European counterparts over the next six years such as France, Germany, Italy, and Japan. The IMF predicts an 8.8% increase in the UK’s gross domestic product (GDP) by the end of 2029, compared to 8.3% for France, 5.7% for Germany, 3.5% for Italy, and 4.4% for Japan.
However, despite the economic challenges globally, there are positive aspects in the global economic outlook. For instance, private consumption is expected to increase by approximately 4% which will outpace total income growth of 2.6%. This consumption boost, though primarily driven by borrowing, can stimulate economic activity. Additionally, some regions show promising growth rates; India, for example, is projected to grow by 6.5% in 2024, supported by strong public investment and a thriving service sector. According to the annual real GDP growth rates (as of April 2024), India is one of the top 10 fastest-growing economies in the world. Similarly, China is targeting around 5% growth by capitalizing on its strong manufacturing and trade sectors.
As far as economic trends in 2024 are concerned, inflation across OECD countries is anticipated to decline from 6.9% in 2023 to 5.0%, continuing to 3.4% in 2025. This decrease will be driven by stringent monetary policies and decreasing pressures on goods and energy prices. By the end of 2025, most major economies are expected to achieve central bank inflation targets. The United States is projected to experience GDP growth of 2.6% in 2024, which will slow to 1.8% in 2025 due to high borrowing costs and tempered domestic demand. Nevertheless, the US is known to have one of the best economies in the world in 2024. The euro area, on the other hand, will see a gradual rebound fueled by improved real household incomes, tight labor markets, and lower policy interest rates, with GDP growth forecasted at 0.7% in 2024 and 1.5% in 2025.
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Which is the Fastest Declining Economy in the World in 2024?
Our Methodology
To identify the fastest declining economies in the world in 2024, we averaged the annual GDP growth rates of 50 countries for the last 5 years i.e., from 2019 to 2023. The 15 countries with the lowest GDP growth rates were eventually selected. The data on GDP growth rate for each year (except 2022) was obtained from the International Motetary Fund’s database. The countries have been presented below in ascending order of average GDP growth rates.
Please note that for the year 2022, we relied on the GDP growth rates from the World Bank for all countries as IMF didn’t have data for some countries for 2022.
1. Lebanon
Average GDP Growth: -9.96%
Our methodology revealed that Lebanon is the fastest declining economy in the world in 2024 with an average GDP growth rate of -9.96% over the past five years. Several other fastest-declining economies have been discussed in depth below on our full free list of 15 Fastest Declining Economies in the World in 2024.
It is worth noting that Lebanon’s economy has experienced a dramatic collapse, with its currency losing approximately 95% of its value since the crisis began in 2019. This devaluation has locked most depositors out of their savings and pushed over 80% of the population below the poverty line. The crisis is rooted in decades of excessive spending and corruption by the ruling elite, compounded by the banking sector’s heavy lending to the state that has resulted in financial system losses above $70 billion.
The situation is further worsened by external pressures, such as the ongoing conflict with Israel and the war in Gaza, which have led to internal displacement and infrastructure damage. The IMF has indicated that while recent fiscal and monetary reforms have reduced inflation, they are insufficient for recovery. Bank deposits remain frozen, and the banking sector’s paralysis continues even in 2024, making it the fastest-declining economy in the world today.
To check the free full list, please visit the 15 Fastest-Declining Economies in the World in 2024.
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Disclosure: None. This article is originally published at Insider Monkey.
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