Countries with Highest GDP Growth 2020

You might have never heard of it, but Nauru—a tiny island in the South Pacific Ocean—was until very recently the fastest growing economy on Earth. The reason? Bird poop. Ever since its independence in 1968, the country's wealth was based on fossilized bird guano, an exceptional fertilizer. Then the guano supply almost entirely dried up,  and now Nauru survives by virtue of the support it receives from Australia, which has built on the island a detention center for its asylum seekers. Such sudden injections of foreign funds can boost dramatically—at least on paper—a country’s output, but the truth is that Nauru is currently facing financial ruin.

The story of this island is a cautionary tale about the perils of relying on just one source of income. 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 it.

The IMF has anticipated that in 2020 the country's economy—unlike much of the world, which will be in recession—will grow by an astounding 51% from just 4.6% in 2019. How is that possible? Last December, following one of the largest offshore crude discoveries in decades, Guyana officially became an oil-producer. With a production that by 2025 is estimated to reach of 750,000 barrels per day, the windfall could transform the nation from one of the poorest in Latin America into one of the richest per capita. 

Experts have already warned of the so-called "resource curse." Too many times in the past, the mismanagement of revenue from oil extraction has been linked slow economic growth, corruption, authoritarianism and a whole array of social maladies—Venezuela, home of the world's largest oil reserves, comes to mind. Not only that, Guyana's near term-growth projections could be a little too optimistic. While the economists at the IMF downgraded their 2019 estimates in response to the coronavirus pandemic, what they could not predict is that—days after releasing their revised numbers—the already historically low oil prices would plunge even further. As a consequence of demand collapsing, producers found themselves unable to sell their stockpiles and forced to pay their buyers to take the barrels they could not store. Prices are already stabilizing and rebounding, but one thing is sure: for many Guyanese citizens the dream of becoming super-rich is for now on hold.

The examples of both Nauru and Guyana tell us that static snapshots of a country’s GDP figures can be misleading, as many once-fast growing economies have seen quick and dramatic downfalls. Ethiopia, Turkmenistan, Rwanda, Mongolia, Uzbekistan, China, Tajikistan, Bangladesh, Laos: these are some of the nations that have shown the most sustained and robust GDP growth among close to 200 routinely surveyed by the IMF.

Over the past two decades, Ethiopia has made improvements to its infrastructure and encouraged greater private-sector involvement in an attempt to transform its agriculture-based economy into a manufacturing hub. Turkmenistan’s autocratic government has so far relied on its natural gas resources but dwindling commodity prices, lack of diversification and an unfriendly business climate paint the picture of a country now facing an economic crisis. Exports of cotton, natural gas and gold provide significant revenues to Uzbekistan, but its government has done little to modernize the economy. While facing slow growth this year, China is expected to bounce back strongly in 2021—Mongolia, Bangladesh and Laos, in the meantime, have taken a page from its playbook and turned themselves into thriving manufacturing hubs. 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.

It is not too hard to see which nations have made plans for long and widespread growth, and which ones draw on finite resources and a business as usual-ways of doing things. 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 10-year equivalent rate.

Source: International Monetary Fund, World Economic Outlook April 2020.