Sluggish global trade, policy uncertainties in major economies, and subdued investment have weighed on the global economy in recent years. While the gloom's biggest impact was on some of the most advanced nations, it has been defied by emerging and developing economies.
In fact, developing economies, with a more than 75% contribution to global growth in output and consumption, have clearly emerged as economic powerhouses. Here’s a look at the top five fastest growing economies in the world, and the investment opportunities they offer.
Bhutan, one of the smallest nations of the world in terms of area, is the fastest growing economy today. Also known as the ‘land of the thunder dragon,’ Bhutan is a land-locked country in the Himalayas and lies between the two most populous countries in the world - India and China. This makes Bhutan a strategically important nation. The country’s economy is fueled by agriculture, forestry, tourism, and hydropower. Its small economy of $2.05 billion (Rank: 168) is expected to grow at an average annual growth rate of 11.1% during 2017-19.
Bhutan places an emphasis on Gross National Happiness (GNH) for gauging the nation’s prosperity than the Gross Domestic Product (GDP). While the country is rapidly riding the growth index, investment opportunities for retail investors are almost negligible here. Its stock exchange is tiny and financial markets aren’t developed.
Ethiopia, the second-most populous Sub-Saharan African country with a GDP size of $61.54 billion (Rank: 73), is projected to grow annually at 8.7% over 2017-2019. Ethiopia represents one of the world’s oldest civilizations, though the nation has remained engulfed in poverty and under-development. Nevertheless, the double-digit growth at around 10.9% (2004-14) has helped the nation to move up the ladder from being the second poorest in 2000, to eleventh in 2014 (as per GNI per capita). The next defined target for Ethiopia is to reach the status of a lower-middle income nation by 2025.
To attract Foreign Direct Investment (FDI), the Ethiopian government has been investing heavily in large-scale projects related to infrastructure and energy, as well as providing benefits such as tax incentives and strategic location for trade.
Ghana returned to a multi-party system of governance in 1992, and ever since, the country has made great achievements as a democracy. Ghana is among the most stable African nations, marked with low corruption and macroeconomic stability. While the country has stayed ahead of the curve in the region, its economic journey has been quite bumpy in recent years. Ghana’s expansionary fiscal deficit and accommodative monetary policy led to high levels of debt, soaring inflation and depreciating currency. The nation’s growth, which slowed down in 2014-16, is expected to pick up in the next three years to an average annual growth rate of 8.1%.
Ghana's $37.53 billion economy (Rank: 89) is endowed with abundant natural resources such as cocoa, gold, and oil. The FDI flows are approximately 8.5% of its GDP size with the main allocation in mining and oil exploration.
Cote d’Ivoire has grown at a steady 8% plus growth rate since 2012. The robust growth has been a result of Cote d’Ivoire’s National Development Plan (2012-2016) adopted to push structural reforms in the country to support the objective of ‘sustained private sector and inclusive growth.’ The NDP for the period 2016-2020 aims to reduce poverty rate and put Cote d’Ivoire on the emerging economy list. The country, with a GDP size of $31.76 billion (Rank: 95), is expected to maintain its average annual growth momentum at around 8.07% over the three-year period driven by increased domestic demand and growing investments.
A report by the U.S. Department of State mentions Cote d’Ivoire as a “fertile soil for U.S. investment.” The Ivoirian government actively encourages FDI through mergers, takeovers and joint ventures. The country’s regional stock exchange - BRVM- allows encourages investment by, and listing of, foreign companies.
India is the only trillion-dollar economy to rank among the top five fastest growing economies in the world. The $2 trillion economy is expected to clock an average annual growth of 7.73% during 2017-19, backed by strong macroeconomic fundamentals, robust domestic demand, favorable demographics, ample resources and a proactive government. To date, the Modi-led government has initiated more than 30 big reforms, breaking the era of policy paralysis, setting new trends, and boosting investor confidence.
India is a land of opportunities for investors and is appropriately referred to as the bright spot against a backdrop of the muted global economy. Retail investors can look to invest in Indian companies via ADRs listed on the U.S. exchanges, or through ETFs focusing on the region. Additionally, the route of investing as a Foreign Portfolio Investor opens a wider spectrum to invest in the sub-continent.
Uzbekistan (7.40%), Myanmar (7.13%), Tanzania (7.10%), Laos (7%) and Djibouti (7%) are the next five fastest growing economies. China ranks seventeenth on the list with a projected average annual growth rate of 6.37% over the three-year period.
The list is based on the average growth rate projections for 2017, 2018 and 2019 by the World Bank.