The Poorest Nations in the World: 5 Countries With the Lowest Per Capita Income
Inequality has been at the center stage of economic policy debate across the globe, and persists among and within nations. Among the economies of the world, the highest Gross Domestic Product (GDP) per capita is $131,781.72 in Luxembourg, while the lowest is $265.18 is in Burundi, based on 2021 IMF estimates. Here’s a look at the nations with the lowest per capita income, which makes them the poorest nations in the world.
Burundi is a small landlocked country in East Africa. The country is characterized as a low-income economy by the World Bank. Agriculture is the primary sector of the economy, employing 80% of Burundi’s population. The agricultural exports of coffee and tea account for 90% of foreign exchange earnings. The nation is heavily reliant on foreign aid; 40% of Burundi's national income is derived from foreign aid, the second highest in Sub-Saharan Africa.
According to a World Bank report, “Burundi has experienced a unique economic situation, due to the decline in foreign aid since 2015, which has caused both fiscal and balance of payments difficulties.” The country reported a GDP of $3.01 billion in 2020. IMF estimates the GDP at $3.24 billion in 2021 and by 2026, Burundi’s GDP is projected to touch $4.3 billion. The nation is among the most densely populated in the region. Weak economic growth and high population growth have resulted in low per capita income, estimated at about $265.18 in 2021, the lowest among all nations. The per capita income is projected to reach $302.98 by 2026.
South Sudan gained independence in 2011. The country has been hit hard by a civil war and falling oil prices since December 2013. In mid-2016, South Sudan relapsed into war, which severely affected economic activities. The county’s GDP fell from $14.8 billion in 2015 to $3.5 billion in 2016. The impact on its per capita income was equally evident, which shrunk from $1,245.68 in 2015 to $286.21 in 2016.
The economy of South Sudan contracted by 13.48% and 5.77% in 2016 and 2017, respectively. The peace agreement signed in September 2018 has rekindled hope for peace and economic recovery, along with the reopening of some damaged oil wells, which are South Sudan’s main source of revenue. The pace slowed further in 2018 and finally in 2019, it entered the positive zone with a 0.87% growth. The economy is poised to grow by 5.3% in 2021 which will push its GDP close to $4.5 billion. The country is still combating high inflation and its future remains precarious. Sudan is expected to become a $6.88 billion economy by 2026, which will increase its per capita income to $420.66 from $314.64 in 2021.
Somalia is slowly transitioning out of a period of fragility and prolonged crisis on the back of political and institutional stability since the 2012 establishment of the federal government. The country became eligible for interim debt relief under the Heavily Indebted Poor Countries (HIPC) initiative in March 2020, which set Somalia on a course to reduce its debt levels. Its debt stood at 55.3% of GDP at that time. While some debt reduction has been achieved, it is still high and would be about 43.3% of GDP in 2024, above the 30% sustainability threshold.
The economy of Somalia relies heavily on the agriculture sector, remittances, and investments in telecoms. The manufacturing and industrial sectors are almost negligible. Somalia has a narrow economic base with its heavy dependence on primary commodities as the major source of export earnings. The country’s economy remains highly vulnerable to price fluctuations, droughts, and locust invasions. The country’s GDP of $5.36 billion (2021 estimates) is expected to expand to $7.05 billion by 2026. Somalia is currently the third poorest country with a per capita income of $346.68, which is expected to increase to $394.47 by 2026.
Mozambique has a long coastline of 2,500 kilometers. The country gained independence from Portugal in 1975. However, the period post-independence was followed by years of a civil war. While this phase of civil conflict ended in 1992, instability continued which hampered the country’s economic development. Mozambique has ample arable land, abundant natural resources, vast coastline, and a strategic location.
Mozambique’s economy was growing at a healthy pace before it entered a period of crisis amidst low commodity prices, drought, conflict, and the fallout from the discovery of hidden debts in April 2016. The undisclosed commercial loans dented confidence in the country; IMF cancelled its finance program while donors froze direct budget support. The result was a fall in economic growth, currency devaluation of around 40% against the U.S. dollar, and inflation climbing over 25%. The GDP of the nation fell from $15.95 billion in 2015 to $11.94 billion in 2016. Mozambique’s GDP is projected at $13.96 billion in 2021, which would expand to $23.6 billion by 2026 as per IMF estimates. Its GDP per capita will reach $630.58 in 2026 from $424.91 in 2021.
The landlocked country of Malawi is located in southern Africa. The political scenario in Malawi has been generally peaceful since its independence in 1964. However, the country remains one of the poorest in the world. Malawi’s economy is heavily dependent on agriculture, employing nearly 80% of the population, and it is vulnerable to external shocks, particularly climatic shocks. Despite efforts, poverty and inequality remain stubbornly high. According to the World Bank, “poverty is driven by low productivity in the agriculture sector, limited opportunities in non-farm activities, volatile economic growth, rapid population growth.” The country’s population of 18.6 million (2019) is expected to double by 2038.
Malawi’s GDP of $9.27 billion (2021) is expected to expand to $11.38 billion by 2026. Based on 2021 estimates, it has a GDP per capita of $431.58, which makes it the fifth poorest nation in the world. Its GDP per capita should marginally improve to $460 by 2026. In January 2021, the government launched the Malawi 2063 Vision that aims at transforming Malawi into a wealthy and self-reliant industrialized upper-middle income country.
Rounding out the list of the ten nations with lowest per capita GDP is Madagascar, Sierra Leone, Central African Republic, Democratic Republic of the Congo, and Afghanistan.
Disclaimer: The author has no position in the index or 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 report is based on April 2021, World Economic Outlook database by IMF. Country related data is based on information from World Bank and IMF website. GDP per capita is Gross domestic product per capita, current prices, U.S. dollars. GDP is the Gross domestic product, current prices, U.S. dollars. Data for Syria is not available.
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