Ten Overlooked High Growth Economies
Of late, most of the economic news coming from around the world has been negative as fears are growing that the stagnation of global economic growth that has been in place in recent years could in fact be turning into a full-blown global slowdown. In fact, there is now a real possibility that global economic growth, which has hovered just above 3% per year since 2012, could fall below the 3% level this year, marking the first time that global growth has fallen so low since 2009. Moreover, this would be just the second time that global growth has fallen below 3% in the last 14 years. However, all is not doom and gloom as, if you look hard enough, there are a number of countries around the world that are still generating significant amounts growth. Some, such as India, are obvious. However, others are less well-known and these overlooked economies can also provide some lessons for the rest of the world on how to generate growth amid a difficult global economic climate.
No region in the world is growing faster than Asia, as the region is home to the giant Chinese market, which, even as growth is slowing there, continues to generate more growth than any other economy in the world. Furthermore, the region is also home to large developed markets such as Japan and South Korea, as well as some of the world’s fastest-growing large emerging markets, such as Indonesia and Vietnam. Moreover, there are three Asian emerging markets that have been growing at a very healthy pace in recent years, but have been largely overlooked by investors and exporters. One such economy is the Philippines, where, despite a population of nearly 100 million and an economy that has been averaging growth of more than 6% per year over the past five years, investment and trade levels have remained well below those of many of its Asian peers. Another large Asian emerging market that has been growing at a strong pace is Bangladesh, where nearly 160 million people live in a country in which the economy has been growing by an average of more than 6% for the past decade. Finally, a smaller Asian economy that is just now starting to gain more attention from investors and businesses is Cambodia, thanks to its strategic location, low labor costs and fast-growing economy. Altogether, Asia is home to many less-visible economies that are providing significant growth opportunities for businesses and investors, thanks to the fact that this entire region is now the primary generator for growth for the global economy.
While Asia is the world’s fastest-growing region, Sub-Saharan Africa is also a region that is home to many fast-growing economies. While many economies in this region have been adversely impacted by the fall in the price of oil and other commodities, a number of Sub-Saharan African economies have managed to continue to record strong rates of growth of late. One such economy is Cote d’Ivoire, where a stabilization of the political situation in that country has allowed its economy to grow by an average of 9% per year since 2012. Another West African success story has been Senegal, where years of economic struggles have given way to stronger economic growth in recent years thanks to that country’s relatively diversified economy. Finally, Rwanda is often associated with its terrible genocide in 1994, but in fact, it has been one of Sub-Saharan Africa’s greatest economic success stories, with the country’s economy expanding by nearly 8% per year for more than a decade. Overall, many Sub-Saharan African economies will continue to struggle to deal with lower commodity prices and are in desperate need of diversification. Nevertheless, growth rates here will easily exceed the global average and some of this region’s economies will be among the fastest growing in the world.
In the Americas, economic growth rates have been adversely impacted by weaker-than-forecast demand levels in the United States and Canada, as well as by the terrible economic situations in countries such as Brazil and Venezuela. Nevertheless, while growth in the Americas has been very disappointing this year, a handful of smaller economies have managed to record relatively strong growth thanks to their ability to attract investment and to develop closer economic ties with the vast US market. One of these economies is the Dominican Republic, where despite a slowdown this year, growth rates have managed to average nearly 7% per year over the past three years. Another such economy is Panama, where economic growth rates have averaged more than 7% since 2010 and where the expansion of the Panama Canal promises to keep growth rates in that country at relatively high levels in the years ahead. Meanwhile, should economic growth in the United States pick up in the coming months, a number of other countries in the region stand to benefit.
Finally, European economic growth levels have been among the lowest in the world over the past decade, but a few European economies have managed to outperform their regional rivals, thanks to their ability to attract investment in their export-oriented manufacturing sectors and their willingness to enact reforms aimed at boosting their economic competitiveness. One such economy is Romania, where growth rates may not be anywhere near the 8%-level they achieved in the years before Europe’s financial crisis, but where growth rates in recent years have been nevertheless among the highest in the region. Another relatively successful economy in Europe in recent years has been Sweden, as growth in Sweden has risen to around 4% over the past 18 months, despite Sweden’s high cost of doing business and the struggles of many of its leading traditional manufacturing companies. What both countries have managed to do is achieve a leading position within their respective manufactured export categories (low-cost for Romania and upmarket for Sweden). In contrast, most other European economies have struggled to maintain their competitiveness in both the low-cost and the upmarket manufacturing sectors, hence their recent struggles.
Altogether, each of the ten economies highlighted here have succeeded due to their ability to improve their economic competitiveness, to attract investment, and to diversify their economies. These are lessons that other economies would do well to learn as the global economic environment remains very difficult and shows no signs of improving over the near-term. Those countries that fail to learn from their more successful peers are likely to find it difficult to generate significant growth in today’s economic climate, while those the have success in emulating these ten often overlooked economies can hope for better days ahead.