The Fastest Growing Economies in 2021
2020 was a tough year for humanity. While the real loss and suffering cannot be fully understood in numbers, the fight against coronavirus pandemic did result in lockdowns, restrictions, travel bans, halt of economic activity—all of which led to an economic crisis. As we continue to combat the coronavirus, 2021 brought a ray of hope on the back of stimulus packages and vaccinations, which are helping to open up of borders, revive manufacturing and exports, and bring back jobs. The 2021 data for 193 nations by the IMF brings some optimism, with GDP for 170 nations expected to grow at 1% and more. Around nine nations are expected to witness growth between 0 and 1%, and the number of economies seeing negative growth is anticipated to be reduced to 14 (as compared to 165 in 2020).
While growth rates reflect the comparative health of an economy over time, the real healing of nations and its people will take longer.
Nevertheless, here’s a look at the five fastest growing economies in 2021, based on IMF’s April 2021 projections.
- 2020: (59.72%)
- 2021: 130.98%
- 2022: 5.44%
- 2023: 4.87%
Libya, an oil-rich country is a member of OPEC and classified as an upper middle-income economy as per the World Bank. It was ruled by Muammar Gaddafi for 42 years until he was removed from power in 2011, which descended Libya into conflict and chaos. Its economy was close to $80 billion at that time, and shrunk to $17 billion by 2015. The nation witnessed a recovery through 2019. Libya has one of the highest per capita GDPs in Africa. The year 2020 saw Libya as a nation governed with two conflicting systems of governance operating on separate budgets, with western Libya under the Government of National Accord (GNA), and the remainder under the control of the Libyan National Army (LNA).
The state of its economy was in shambles for most of 2020 as the nine-month oil blockade which began in January 2020 proved debilitating for the oil-dependent economy. According to a World Bank report, “Libya counts on oil and gas for over 60% of aggregate economic output and over 90% of both fiscal revenue and merchandise exports.” The nation’s economic problems were exacerbated by the COVID-19 pandemic.
Still, Libya has made progress on its economic and political front towards the end of 2020. The country is set to hold parliamentary and presidential elections in December 2021. Libya’s oil production is projected push the economy forward. While uncertainties loom, a significant recovery is expected if the current rapprochement remains on track. After witnessing a 60% contraction in 2020, the economy of Libya is expected to grow by 130% in 2021. Its GDP is projected to expand to $24.26 billion in 2021, which is still much smaller than its size of its economy in the pre-conflict period.
2. Macao SAR
- 2020: (56.31%)
- 2021: 61.22%
- 2022: 43.04%
- 2023: 4.75%
Macao has been a Special Administrative Region (SAR) of the People’s Republic of China since December 1999, and is categorized as a high income by the World Bank. Macau has a gaming industry which can be traced back to the 16th century, and is still a major contributor to its economy. In 2002, the MSAR Government liberalized the gaming market, introducing new investors and operational models to the local market. At the end of 2020, there were 41 casinos in Macao, employing close to 60,000 people. In recent times, “Macao's gross gaming revenue has even exceeded the Las Vegas Strip occasionally, which makes it becomes the largest gaming city in the world.”
Macau is a small but stable economy which follows an open economic policy. It has one of lowest tax regimes in the Asia Pacific region and a high per capita income. Tourism accounts for around 48% of Macau’s GDP. Macau’s per capita income was $81,156.61 in 2019 which fell to $36,350.16 in 2020 as its economy contracted by 56% from $55.15 billion in 2019 to $24.33 billion. The government announced a new round of stimulus package in March 2021 to kickstart the economy. On the back of the stimulus and revival in tourism, Macau’s economy is expected to bounce by 61% in 2021 making it the second fastest growing economy in 2021. Its GDP is projected to expand to $39.45 billion in 2021, and exceed $73.46 billion by 2026.
- 2020: (32.24%)
- 2021: 18.87%
- 2022: 13.38%
- 2023: 12.63%
The Maldives, a nation of islands in the Indian Ocean that spans across the equator, is best known for its tourism. The country is comprised of 1,192 islands with its population dispersed across 185 islands. Maldives is an upper middle-income country as per the World bank classification. The country has witnessed robust growth backed by high-end tourism which has helped it build a strong infrastructure, and affordable public services.
Around a quarter of Maldives’ GDP is directly reliant on tourism. The other major contributors to its GDP are fisheries and other commercial activities. While the economy has witnessed a robust average growth over the past decade, it has been hit time and again by external shocks, with the December 2004 tsunami being one such example. To combat the spread of COVID-19, the government of Maldives closed borders between end-March to mid-July 2020, resulting in a sudden stop of tourist inflow, resulting in one of the biggest ever hits its economy has seen. Maldives received more than 1.7 million visitors in 2019 but witnessed a 67.4% drop in the number in 2020.
The size of its GDP shrunk by one-third from $5.63 billion in 2019 to $3.75 billion in 2020. The World Bank estimates “based on household survey data indicate that the poverty rate has increased from an estimated 2.1% in 2019 to 7.2% in 2020.” With some revival in tourism, its economy is set to expand to $4.5 in 2021, growing at 18.87% in 2021. Maldives is set to cross the $7 billion mark by 2025 based on current estimates by the IMF.
- 2020: 43.38%
- 2021: 16.39%
- 2022: 46.49%
- 2023: 30.56%
Guyana is among the few nations which managed to evade economic contraction during 2020. Guyana is a middle-income country and has one of the highest emigration rates in the world. Guyana is covered with dense forests, and is home to fertile agricultural lands and abundant natural resources. Gold, bauxite, sugar, rice, timber, and shrimp are among its leading exports.
Back in 2000, the U.S. Geological Survey identified the Guyana-Suriname Basin as the second highest resource potential among unexplored oil basins in the world. ExxonMobil (U.S.), Esso (U.S.), Hess, Repsol (Spain), Anadarko (U.S.), Total (France), Tullow Oil (UK), and CGX Energy (Canada) have been a part of exploration and drilling activities over the years. ExxonMobil made the first commercial discovery in Guyana in 2015 and started production in December 2019. The company continues to advance the Liza Phase 2 project, which is expected to start in mid-2022. Guyana is among the top 20 largest oil and gas reserve holders in the world and is projected to be among the world's largest per capita oil producers by 2025.
With a projected 16.39% growth in 2021, Guyana is among the fastest growing economies in the world. Its GDP of $5.76 billion in 2020 is expected to expand to $7.25 billion in 2021 and enter the double digits by 2023. It has a GDP per capita income of $7,327 which is estimated to grow to $9,192 in 2021 and touch $15,000 by 2025.
- 2020: (7.97%)
- 2021: 12.55%
- 2022: 6.93%
- 2023: 6.82%
Based on IMF projections for 2021, India is the fifth fastest growing economy, and the fastest-growing trillion-dollar economy in the world. With a population of more than 1.2 billion, India is the world’s largest democracy. National lockdowns in the first half of 2020 to combat the coronavirus pandemic resulted in a near-halt of its economic activities, affecting both consumption and production. The country reported two consecutive quarters of negative GDP growth, as a result of which India entered into a technical recession for the first time in its history. Overall, the country witnessed a contraction of 7.97% during 2020.
The Union Budget presented in February brought cheer to the stock markets and promises to focus on growth and investment climate. According to the Reserve Bank of India, “Public investment in key infrastructure sectors is a force multiplier with historically proven ability to revive the broader economy by directly enhancing capital stock and productivity, and by attracting private investment.” While the recent surge in COVID-19 cases adds some uncertainty to the near-term domestic growth outlook, India remains a compelling growth story.
India is a middle income nation as per the World Bank. The country’s GDP reduced from $2.87 trillion in 2019 to $2.7 trillion in 2020. On the back of a revival in economy which is projected at 12.25% in 2021, the GDP is expected to cross the $3 trillion mark, and reach $4.2 trillion by 2025.
With a projected growth rate of 12.05%, 9.01%, 8.5%, 8.44% and 7.56%, the economies of Panama, Montenegro, Peru, China and Kenya round up the top ten fastest growing nations.
Disclaimer: The rankings are based on IMF data released in April 2021. Nominal GDP is mentioned as GDP is at current prices, U.S. dollars. The growth rate is the annual percentages of constant price GDP are year-on-year changes; the base year is country-specific. The gross domestic product per capita is in U.S. dollars at current prices. The author has no position in any stocks mentioned. Investors should consider the above information not as a de facto recommendation, but as an idea for further consideration. The report has been carefully prepared, and any exclusions or errors in it are totally unintentional.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.