Africa and Asia will have the majority of the fastest-growing economies in the near future. Sub-Saharan Africa has positive economic growth, where the average GDP growth is currently at 5.6 percent and is expected to rise to 6 percent in the coming years. In addition, the average GDP growth for the four fastest-growing economies in Africa is currently at 8.975 percent, which has rapidly increased since the 1990s. This shows that Africa is becoming one of the world’s fastest-developing regions.
This is partly due to the fact that Africa has untapped natural resources and is recovering from periods of upheaval and hardship. Even though the region has experienced many economic setbacks, the size of Africa’s economy now rivals Russia and Brazil. This growth is a result of the increase in the cost of natural resources and recent low inflation rates as well as a boom in both infrastructure and investment, especially from China.
Yet, according to the McKinsey Global Institute, natural resources and government spending only generate one-third of Africa’s GDP. The remaining two-thirds come from other sectors, such as wholesale, agriculture, and telecommunications. This suggests that the rise in commodity prices is a small part of Africa’s growth. Other reasons for Africa’s growth include government resolutions of civil wars, improvements in social well-being and the establishment of better business environments. These government changes have increased African productivity by helping companies to achieve greater economies of scale while also increasing investment and competition.
With an increasing population and limited resources, China has been reaching out to its underdeveloped neighbours to acquire their unexploited resources. Due to the increase in demand for commodities, Asia has recently doubled its trade with Africa, capturing over a quarter of the continent’s total trade. It seems that China is primarily responsible for the high growth rates of surrounding countries in Asia as well as African countries.
Here are the 10 developing economies to watch in 2014.
Even though 60.5 percent of Zambia’s population still lives below the poverty line, growth is expected to continue and the inflation rate is set to be low in the next few years. According to The World Bank, Zambia’s annual growth was 7.3 percent of GDP in 2012 and is estimated to rise to 7.9 percent in 2014. With copper being Zambia’s main export, prices will continue to increase with foreign investment. Growth continues by means of economic development in the sectors of agriculture, infrastructure, and finance.
Driven by gold and copper mines, Eritrea’s annual GDP growth is expected to remain roughly the same, projected at eight percent in 2014. The income from the mining sector could help to improve the low revenue-spending ratio. The government of Eritrea is investing in areas of food security and agricultural production as well as infrastructure and human resources developments.
Despite past challenges pertaining to violence, Timor-Leste has progressed significantly as a result of its abundance of natural resources. Government revenues have enhanced as a result of foreign investments that took place in the development of petroleum resources. With the newfound money, Timor-Leste has expanded its infrastructures in order to address social needs.
The government’s Strategic Development Plan will focus on infrastructure and skills to generate private sector investment in order to lower the unemployment rate and reduce poverty in Timor-Leste. This economy is expected to have GDP growth of 8.5 percent in 2014.
In recent years, Laos received foreign investments that led to further exploitation of its natural resources such as hydropower, metals and wood. It is one of the major suppliers of hydropower for neighboring countries like China. Both hydropower and mining sectors account for one-third of Laos’ economic growth, which has resulted in a reduction in poverty.
The economy was able to attain an annual growth in GDP of 8.2 percent in 2012 and growth is presumed to rise to 8.5 percent in 2014. In the long run, Laos is predicted to evolve into a lower-middle income economy by 2020.
In 2012, Iraq’s annual growth was 8.4 percent, and this is anticipated to increase to 8.5 percent in 2014. This country is a leading oil exporter and could provide about 50 percent of the world’s increase in oil production in this decade. China is the key investor and purchaser of Iraqi oil. With so many untapped natural resources, Iraq has become one of the world’s most important markets to explore.
Despite the recent civil war in Libya, the country’s huge oil and gas reserves continue to fuel economic growth. In 2014, Libya’s annual growth is predicted to be at 8.8 percent. Oil accounts for 80 percent of GDP and an astounding 99 percent of government revenue.
With oil prices rising and production growth, the Libyan economy will likely continue to expand at an accelerated rate in the future. Regardless of having very low tariffs and taxes, a major obstacle to international investment is the destabilized security situation brought on by the 2011 revolution.
One of the world’s least developed economies, Bhutan, is quickly growing because of an increase in tourism and large exports of hydropower to its neighbouring countries like India. Its glacial-sourced rivers are an immensely underexploited resource that could provide up to 20 times more energy than is currently being provided, according to the Tourism Council of Bhutan.
This is mostly due to the cautiousness of the government in minimizing this industry’s impact on the environment. Still, this hydroelectricity, which is exported mainly to India, is the single greatest cause of the country’s rapid economic growth, which is expected to grow to 8.8 percent in 2014.
With an expected growth rate of 9.2 percent in 2014, Turkmenistan possesses some of the world’s largest oil and natural gas reserves (it is ranked fourth in the world in terms of natural gas deposits) and has a developed agricultural sector. This country has also seen a rapid increase in international investment as countries seek access to its vast natural gas and oil reserves with prices on the rise for these commodities. With new pipeline projects in the works, the economy’s future prospects look very good.
2. Sierra Leone
While considered one of the world’s least developed countries, Sierra Leone has been growing quickly, and is expected to achieve GDP growth of 11.2 percent in 2014. It has potential for long-term economic gains due to its rich mineral resources and underexploited agriculture sector.
This country is known for its diamonds and other precious minerals such as titanium ore and gold. However, a great deal of diamond revenue is lost because of smuggling activities that remain common in the country; legal diamond exports only account for a small fraction total production, though improvements have been made in recent years.
Mongolia has successfully evolved in the last few decades from a former Soviet satellite state to the fastest growing capitalist country in the region. Mining is the biggest industry and accounts for about a third of the total economy, with animal products such as cashmere coming in as the second largest industry.
Mongolia has been given the nickname the “Mongolian Wolf”, an allusion to the term “Asian Tiger” given to fast growing economies in Asia. With new mining prospects and large continued investment from China fuelling its expected growth of 15.3 percent in 2014, the country looks set to keep its title.