29 November 2017

The Ten Fastest-Growing Economies in 2018

2017 is proving to be the best year for the global economy since the beginning of this decade, with global economic growth rates approaching a five-year-high.  Over the course of this year, much of the world’s attention has been on the stronger performance of many of the world’s leading developed economies in North America, Europe and East Asia.  However, even with many of their most important economies struggling in 2017, emerging markets will still account for more than 55% of the economic growth generated by the global economy this year.  Furthermore, as we look ahead to 2018, all of the countries that we forecast to be among the ten fastest-growing economies in the world next year will be emerging markets.  In fact, all of these ten fastest-growing economies will be found in just two regions, Asia and Africa.  For Asian emerging markets, a location at the heart of the world’s fastest-growing region will once again prove to be a major boost for their economies, especially those that are developing major low-cost manufacturing bases.  For Africa, those countries that can maintain or improve their level of political and economic stability stand to benefit from higher levels of foreign investment and rapidly-expanding domestic markets.

In 2018, we are forecasting the following ten countries to record the highest rates of economic growth in the world:

Libya (42.0% GDP growth in 2018): The Libyan economy has been devastated by years of war and civil strife, but stability will come to more areas of that country in 2018, particularly the centers of the country’s all-important oil industry.

Bhutan (9.0%): A dramatic expansion of Bhutan’s hydropower industry will fuel 2018’s rapid economic growth in a country strategically located between India and China.

Ghana (8.6%): Lower oil prices stunted the growth of Ghana’s oil and gas industry in recent years, but a recovery is in order and Ghana will reclaim its title of Sub-Saharan Africa’s fastest-growing economy in 2018.

Ethiopia (8.5%): Ethiopia has been one of the world’s ten-fastest-growing economies in the world since 2004 and has averaged annual economic growth of 10.5% since then, the best performance of any economy in the world over that period.

Ivory Coast (7.2%): Civil war and political instability had derailed the Ivorian economy for a number of years, but an increase in stability, coupled with rising cocoa demand, has fueled a new round of rapid economic growth in the Ivory Coast. 

India (7.1%): The withdrawal of 86% of India’s banknotes from circulation, and a new goods and service tax, slowed economic growth in India in 2017, but 2018 will see growth return to the levels that are expected of the world’s most-populous country.

Philippines (7.0%): The Philippines has emerged as East Asia’s fastest-growing economy in recent years, thanks to the rapid expansion of the country’s service sector and its English-speaking workforce.

Vietnam (7.0%): Vietnam is emerging as the big winner in the race to attract low-cost manufacturing investment that has primarily gone to China in recent decades and this will fuel a new surge in economic growth in that country.

Rwanda (6.9%): The pro-business and pro-investment policies of Rwanda’s President Paul Kagame have turned what had been one of the world’s poorest countries into one of Africa’s most dynamic economies.

Bangladesh (6.7%): As the world’s eight-most-populous country (163 million people), Bangladesh is simultaneously developing low-cost manufacturing industries and services sectors that are fueling a round of high economic growth.

A quick glance at the ten countries that we forecast to record the highest rates of economic growth in 2018 reveals that they largely share a number of characteristics that are allowing them to record such high rates of growth.  Politically, each of these countries is achieving a level of political stability that is at least higher than it was in previous years, with countries such as Libya growing, in large part, due to a rebound from conflict-induced downturns.  Furthermore, nearly all of these countries have governments that are doing more than their slower-growing neighbors to attract foreign investment and develop ties with key export markets.  Economically, each of these countries is either a regional hub of investment, or is beginning to attract higher levels of investment.  Likewise, all of these countries are exporting goods or services to wealthier markets, following the example set by East Asia’s export-driven economic expansion in the second half of the 20th century.  Finally, each of these countries are relatively poor, which allows growth to rise from a low base, while resulting in labor and production costs that are low enough to attract the attention of foreign businesses and investors.

Each of these ten countries on our list of the ten fastest-growing economies for 2018 still has significant room for additional growth in the years after 2018.  For each of them, stability will be the most important factor in determining their longer-term economic performance, as most of the countries in our top ten have experienced political unrest in recent years, or have many factors in place that could fuel such unrest in the coming years.  Meanwhile, nearly all of these countries are located in the two regions that are forecast to record the highest rates of regional growth in the coming years, Asia and Sub-Saharan Africa.  With neighbors that are also forecast to record strong growth in the years ahead, these fast-growing economies will have major opportunities to both export goods and services and to attract higher levels of investment.  As long as their governments continue to promote trade, investment and a stable business climate, these countries will all have the opportunity to make more appearances on this top ten list in the years to come.