The Fastest-Growing Economies for the Next Ten Years

Over the next decade, the global economy is expected to grow at a rate of between 3% and 4% per year, similar to the growth rates that it has recorded over the past five years.  During the past five years, the global economy has averaged growth of just 3.4%, and looking ahead, the prospects for much higher levels of growth are not good.  First, developed economies have seen their growth ceilings fall in recent years and without massive increases in productivity, growth levels in developed economies will remain well below where they stood in previous decades.  Likewise, many of the world’s leading emerging markets will continue to struggle to record high rates of economic growth due to the fact that commodity prices are not expected to rise sharply over the coming decade, while demand levels in key export markets will remain relatively subdued.  However, there are two regions where exporters and investors will be able to find significant growth opportunities in the coming decade.  One is obviously Asia, where many of the world’s fastest-growing economies are located.  The other is Africa, where despite a recent slump, the prospects for long-term growth remain positive. 

Asia: Over the next decade, nearly 50% of all of the economic growth around the world will be generated in Asia, and most the world’s fastest-growing economies will be found there.  China will remain the leading engine of growth for the global economy, but growth rates there will fall to below 6% by the end of this decade and closer to 5% during the next decade.  While this is well below earlier growth levels, the size of China’s economy means that this will allow China to remain a major driver of growth.  East Asia’s other leading emerging markets will also grow at a strong pace over the next decade, led by three of the region’s poorer countries, the Philippines, Vietnam and Indonesia.  These countries will average economic growth rates of 6.9%, 6.4% and 5.5% respectively over the next decade and by 2027, they will have a combined population of 500 million people, resulting in the expansion of large domestic markets in those countries.  South Asia will be the other sub-region in Asia that will provide major growth opportunities over the next ten years.  India will be the world’s fastest-growing large economy over the next decade, averaging growth of nearly 8% per year.  Likewise, rising investment levels will drive up average economic growth rates in Bangladesh (6.8%) and Pakistan (5.4%) during this period.  Altogether, Asia’s role as the center of the global economy will continue to grow in the coming years.

Africa: Until the recent fall in commodity prices, Africa was the second-fastest-growing regional economy in the world.  However, the sharp fall in oil and other commodity prices in recent years put the brakes on Africa’s economic expansion and has created severe hardships for many of that region’s leading economies.  In the coming years, some of these economies will continue to struggle, but elsewhere in Africa, growth rates are forecast to rise substantially.  No sub-region is showing more potential for growth than East Africa, where most of Africa’s fastest-growing economies are located.  In fact, over the next decade, Ethiopia (7.3%), Mozambique (7.1%), Tanzania (6.8%), Uganda (6.6%) and Kenya (6.0%) will each record average economic growth rates of at least 6% per year.  Likewise, a handful of West Africa’s more stable countries, such as Senegal, Cote d’Ivoire and Ghana, will also record strong rates of growth in the next ten years.  As such, it is clear that not only does Africa provide many of the best long-term opportunities for growth, but some countries in that region will see very high rates of growth over the coming decade as well.

The Rest of the World: Outside of Asia and Africa, growth rates will fail to rise significantly in the next ten years, even as many of today’s slumping economies gradually regain strength.  Growth rates in developed economies will remain subdued and much lower than the rates of growth that were recorded in previous decades.  In fact, only a small handful of developed economies are forecast to record average economic growth rates of more than 2% in the coming years, and most of these are New World economies such as the United States, Canada and Australia that have rising populations and vast amounts of natural resources.  Elsewhere, the leading economies in the Middle East will need much higher oil prices in order to record higher rates of growth, and it is unlikely that oil prices will rise sharply in the coming years as long as supplies remain high and demand levels remain subdued.  In Europe and Japan, economic growth will be held back by worsening demographic situations as these economies’ working- and consuming-age populations decline.  Latin American economic growth over the next ten years will also remain well below potential, due in large part to lower commodity prices and the struggles of that region’s largest economies.  As a result, it will be the emerging markets of Asia and Africa that will provide the greatest opportunities for growth in many sectors of the global economy over the next ten years.