Countries with Highest GDP Growth 2022

You might have never heard of Nauru—a tiny island in the South Pacific Ocean—which was the fastest-growing economy on Earth until a decade ago. What changed? Bird poop, specifically the island's fossilized bird guano supply, which is an exceptional fertilizer. Once Naura's fertilized guano supply almost entirely dried up, its gross domestic product (GDP) growth virtually ceased. The island now survives economically due to the support it receives from Australia, which has built a detention center there for imprisoned asylum seekers. Such sudden injections of foreign funds can boost economic output dramatically—at least on paper—but the truth is that Nauru is facing financial ruin.

How Economic Growth Takes Place Is Critical

The story of this island is a cautionary tale about the perils of nations relying on just one source of income for their economic well-being instead of trying to develop a diversified economy. The people of another quite small nation, Guyana—215,000 square kilometers bordering with Brazil, Suriname, Venezuela and the North Atlantic Ocean—could learn a thing or two from Nauru's experience.

About two years ago—following one of the largest offshore crude discoveries in decades—Guyana officially became an oil producer. With a production that is estimated to reach up to 800,000 barrels per day by 2025, the windfall could transform the nation from one of the poorest in Latin America per capita into one of the richest. And with the war in Ukraine and oil prices at a 10-year high, this year Guyana is set to maintain its status as the world's fastest-growing economy for the third year in a row, with a GDP growth rate of over 47%.

Yet experts have already warned of the so-called "resource curse," that is, the mismanagement of revenue from oil extraction that historically been linked to slow economic growth, corruption, authoritarianism and a whole array of social maladies as the example of Venezuela demonstrates. To address these concerns, Guyana's government has implemented a sovereign-wealth fund and promised to invest all oil profits in the construction of roads, schools and hospitals. However, critics argue that the guidelines and rules governing the fund are less than transparent. It is only prudent to question whether these sudden riches will enrich just the few or lift the many out of poverty. In the meantime, Guyana's fishermen in the coastal area say that all the drilling and vibrations from oil exploration are ruining the marine environment, and that today their catches are a small fraction of they used to be. Exploiting one of Guyana's natural resources is damaging another.

Balanced Economic Development Is Key

The experiences of Nauru, Venezuela and Guyana tell us that single-year GDP figures can be misleading since many once-fast growing economies have experienced quick and dramatic downfalls, and because not everyone shares in all the benefits or downsides of an economy's shifting fortunes. The examples of Ethiopia, Rwanda, Mongolia, China, Bangladesh and Vietnam demonstrate sustained, robust GDP growth over many years among close to 200 countries routinely surveyed by the IMF.

Meaningful economic growth is a marathon, not a sprint. Amid bouts of ethnic violence and extreme weather events exacerbated by climate change, over the past two decades Ethiopia still managed to make improvements to its infrastructure and encourage greater private-sector involvement in an attempt to transform its agriculture-based economy into a manufacturing hub. Rwanda—with its extensive economic development and poverty reduction programs—shows what efficient and democratic political institutions can do to a country once ravaged by civil war and genocide: turn it into an economic miracle. While facing slower growth this year and a decline in foreign investment, China is expected to register GDP growth rates of over 5% in the next few years and remains on track to pass the US as the world's largest economy by 2030 (assuming Covid-19 outbreaks remain well-contained). Bangladesh and Vietnam have taken a page from China's playbook and turned themselves into thriving manufacturing hubs.

It is not too hard to see which nations have made sustainable plans for the long haul and which ones bet their economic futures on a single commodity. It will be interesting to see how they all fare 10 years from now.

The Gross Domestic Product of a country can be defined as the total monetary value of the goods and services produced within its borders in a year. GDP growth is expressed as a percent. The average growth rate has been calculated using the geometric mean to obtain a 5-year equivalent rate.

Source: World Economic Outlook, April 2022.