Emerging Markets

The Top Emerging Markets in the World

Economy and world
Credit: Photo by Christine Roy on Unsplash

The term "emerging markets" was coined four decades ago by Antoine van Agtmael. He was working for the International Finance Corporation when he had to name an investment idea that provided exposure to prominent developing nations. Over the decades, the term has been used in various connotations to represent these diverse economies that define a uniform narrative—dynamism, progress and opportunity.

Here's an economic overview of the ten largest emerging markets that constitute 31% of the world’s nominal GDP.

1. China

China is the world’s second-largest economy and an upper middle-income country as per the World Bank classification. China’s prolonged COVID lockdown and lingering restrictions dampened its growth in 2022. The return of normalcy in the mainland is expected to push its growth from 3% in 2022 to 5.2% in 2023. The growth projection for 2024 is poised at 4.5%. The rebound in its economy is expected to generate positive spill in the region. However, China’s economy faces two headwinds: impact of global slowdown on its exports and weakness in its real estate market. Its GDP for 2023 is projected at $19.37 trillion, which will be equivalent to 18.43% of the global GDP. By 2028, China’s GDP is estimated to touch $27.5 trillion, which will be 20.5% of the global GDP share.

2. India

India is a bright spot amid global economic uncertainties with strong macroeconomic fundamentals, fiscal discipline, high saving rates, robust domestic demand and political stability. The government has remained committed to increasing capital spending, particularly on infrastructure, to boost growth and competitiveness. Over the years, the rising middle class and corresponding shift in spending pattern have strengthened India’s domestic consumption-led economy. Its nominal GDP, which is assessed at $3.76 trillion for 2023, is poised to be $5.57 trillion by 2028 as per IMF estimates, which will make India the world’s third-largest economy. India is a lower middle-income nation as per the World Bank. According to an EY report, by 2047 i.e. 100th year of the country’s independence, Indian economy will a reach GDP size of $26 trillion with per capita GDP crossing $15,000.

3. Brazil

Brazil, an upper middle-income nation as per the World Bank, is the largest economy in Latin America. It is poised to be the tenth-largest economy in 2023 with a GDP size of $2.08 trillion as per IMF estimates, moving up one spot from its 2022 ranking. Brazil’s GDP is projected to be $2.75 trillion by 2028, making it the eighth largest in the world. The country is home to more than 60% of the Amazon rainforest, the largest tropical forest in the world. Driven by rising global demand, strong prices and technological advances, Brazil’s agricultural production has grown rapidly over the past two decades. However, public corruption scandals, political issues, inflation and employment, and income inequality have created structural bottlenecks for its progress, and thus, despite favorable demographics, its growth potential has not been fully realized over the past decade.

4. South Korea

South Korea’s journey from a war-devastated nation to a ‘trillion dollar-club’ economy has been remarkable. According to the World Bank, the policies adopted by the government resulted in real GDP growth averaging 10% annually between 1962 and 1994. However, the Asian financial crisis exposed the longstanding weaknesses in its economy (such as high levels of short-term foreign borrowing), which led to a sharp contraction of its GDP. Today, the country is a hub for innovation and technology. Korea is home to world-famous companies like Samsung Electronics Co. Ltd., Hyundai Motors Company Limited, Kia Motors Corporation, Hyundai Heavy Industries Company Limited and POSCO. The projected GDP size of $1.72 trillion for 2023 places Korea as the 12th largest economy. Its GDP is expected to reach a size of $2.12 trillion by 2028. Korea remains one of the world’s most export-dependent industrialized nations.  

5. Mexico

Mexico is a land of rich cultural history and abundant natural resources. It is the 14th largest economy in the world and the second-largest economy in Latin America. Mexico has made progress in the past three decades; however, it hasn’t been able to achieve its full potential. According to a report, “Mexico’s 2% average annual GDP growth rate since the signing of NAFTA in 1993 has been slower than most emerging markets due in part to its high rates of labor informality (56%), poverty (44%), and declining oil production.” Mexico’s 2023 GDP is estimated at $1.67 trillion, and by 2028 it is expected to reach $2 trillion. Mexico is classified as an upper middle-income economy as per the World Bank. Mexico has 6.1 billion barrels of proven oil reserves and is an OPEC+ nation.

6. Indonesia

Indonesia, the world’s largest archipelago, is the 15th largest economy in the world and the largest economy in Southeast Asia. During this 30-year period until 1997, the country grew at an average annual rate of 7%. The country was hit hard by the Asian financial crisis of 1997, resulting in a double-digit contraction of GDP. Indonesia adopted corrective policies, which shielded to its economy during the 2008 meltdown. However, COVID-19 impacted its economy adversely, resulting in income reclassification by the World Bank from upper-middle to a lower-middle income nation. The current period marks the final phase of the 20-year development plan (2005—2025), which “aims to strengthen its economy by improving human capital and competitiveness in the global market.” Indonesia’s 2023 GDP estimate stands at $1.39 trillion and is projected to reach the $2 trillion mark by 2028.

7. Saudi Arabia

Saudi Arabia, officially the Kingdom of Saudi Arabia, has the world’s second highest proven oil reserves. As the world’s largest producer and exporter of oil, petroleum is an integral part of the Saudi economy. Its economy grew at 8.7% in 2022 on the back of high oil prices, boost in private investment and implementation of reforms. Realizing its dependence on oil, Saudi Arabia has tried to diversify its economy in the recent decade. It joined the World Trade Organization in 2005 to gain access to global markets, create jobs, and encourage foreign investment. In 2022, it experienced a 4.8% non-oil GDP growth with wholesale, retail trade, construction and transport as the main drivers of non-oil growth. The current state of booming economic activity is accompanied with low unemployment and inflation. The GDP estimate for 2023 is at $1.06 trillion, which is projected to be $1.25 trillion by 2028. 

8. Türkiye

Türkiye is the 19th largest economy in the world. It is projected to join the ‘trillion-dollar economy’ club in 2023 with a GDP size of $1.02 trillion from $905.52 billion in 2022 as per IMF data. Türkiye’s real GDP grew by an average of 5% per year between 2002 and 2018, which helped it attain the upper-middle-income status. However, the country’s economy has faced multiple challenges since 2018, including high inflation, rising current account deficit and external debt. In early 2023, a devastating earthquake caused widespread damage in southern Türkiye. The boost from reconstruction efforts is expected to largely offset the negative impact from disruption to economic activity. Overall, the unemployment rate is expected to stay close to 10% while inflation is likely to remain above 40% in 2023 and 2024. The economy is estimated to grow to $1.33 trillion by 2028.

9. Taiwan

Taiwan’s vibrant market economy occupies an important position in the global economy. Its transition from ‘poor to prosperous’ is often dubbed as the ‘Taiwan Miracle.’ Taiwan entered the high-technology sector in the 1980s. Today, its information and communication technology industry are among the best known in the world. Taiwan is home to some of the best-known companies worldwide like Taiwan Semiconductor Manufacturing Company Ltd. (TSM), ASE Technology Holding Co., Ltd. (ASX), United Microelectronics Corporation (UMC), Chunghwa Telecom Co., Ltd. (CHT), Himax Technologies, Inc. (HIMX), Foxconn/Hon Hai Precision Industry Co., MediaTek Inc., Formosa Petrochemical Corporation and Delta Electronics, Inc. Taiwan is a high-income economy as classified by the World Bank. According to the IMF data, Taiwan’s 2023 GDP is estimated at $790 billion, and is expected to cross the $1 trillion mark by 2029.

10. Poland

The Polish economy has witnessed a steady pace of growth and development for over 25 years, making it one of the most resilient European economies. Over the years, “a sound macroeconomic framework, effective absorption of European Union investment funds, a sound financial sector, better access to long-term credit, and access to European labor markets have supported long-term inclusive growth and poverty reduction”, according to the World Bank. With a projected GDP of $748.88 billion in 2023, Poland is the 21st largest economy in the world. Poland will join the trillion-dollar economy club by 2028. The two main drivers of Poland’s economic growth are exports and domestic consumption. The nation is combating high inflation and slowing growth due to the ongoing Russia–Ukraine war. Poland opened its borders to one million refugees from Ukraine.

Disclaimer: 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. GDP data on World Bank and IMF WEO April 2023. Gross domestic product is in current prices (U.S. dollars). There is no official definition of an Emerging Market. The countries which are commonly used in EM indices are Argentina, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Iran, Korea, Kuwait, Malaysia, Mexico, Peru, Philippines, Poland, Qatar, Russia, Saudi Arabia, South Africa, Taiwan, Thailand, Turkey, and United Arab Emirates. Russia is not covered in this report as it has been removed from few emerging market indices.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Prableen Bajpai

Prableen Bajpai is the founder of FinFix Research and Analytics which is an all women financial research and wealth management firm. She holds a bachelor (honours) and master’s degree in economics with a major in econometrics and macroeconomics. Prableen is a Chartered Financial Analyst (CFA, ICFAI) and a CFP®.

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