In this article, we will be carrying out a global growth analysis in terms of economic output as well as population, while covering the 10 fastest growing regions in the world. If you wish to skip our detailed analysis, you can move directly to the 5 Fastest Growing Regions in the World.
The Global Economic Outlook
According to a report by the International Monetary Fund (IMF), global growth was forecasted to slow from 6% in 2021 to 3.2% in 2022 and 2.7% in 2023. The slowdown in global economic growth is due to high inflation and the aftereffects of the global pandemic. Russia’s war with Ukraine also played its part in reducing this growth since it led to a food and energy crisis. Apart from the COVID-19 phase and the global financial crisis, the world experienced the slowest economic progress in 2022. On January 23, the World Bank reported that this economic growth will drop even further in the current fiscal year, 2023. Banks in some of the biggest economies worldwide are still combating the global inflationary pressure. On September 18, CNBC reported that the European Central Bank increased its interest rate to a record high of 4%. The Federal Reserve has also hiked the interest rates multiple times during 2022 and 2023 to tame inflation.
Amidst a slow global economy, the United States and China continue to sustain their economic prosperity. The US trade with China holds significance for the two economies since both qualify as significantly large export markets for each other. The factories in China assemble products from all over the world for export to America. However, the future of this trade remains uncertain due to existing trade dynamics. On September 26, the Council on Foreign Relations reported that the US has concerns regarding China obtaining Western technology to intensively build its domestic companies. In response to these concerns, the Biden administration has also retained previously imposed tariffs on Chinese imports and asserted tightened control over high-tech US exports to China.
Simultaneously, the world is undergoing a transformation which is led by technology. Since the release of OpenAI’s ChatGPT in November 2022, the concept of artificial intelligence used for understanding human emotions is no longer a futuristic technology. The chatbot acquired one million users within a week of its launch. In January, Microsoft Corporation (NASDAQ:MSFT) announced the extension of its partnership with OpenAI after prior investments in 2019 and 2021. The incorporation of AI in the company’s products and services has been diverse. While Microsoft Designer uses AI for social media images, Bing AI uses OpenAI to answer user queries.
Regional Analysis of Economies
At a regional level, many economies around the world are emerging in the current global scenario. Some of the rapidly growing countries belong to Asia and Africa. For instance, India had a GDP growth of 8.7% between 2021 and 2022, despite the deadly pandemic. The five major rapidly emerging economies in the world include Brazil, Russia, India, China and South Africa. Another fact to take into consideration is that these emerging nations have started to account for an increasing share of global economic growth as compared to the G7 nations between 1982 and 2022.
According to a report by the United Nations, the global population reached 8 billion in November 2022 and is expected to increase by nearly 2 billion over the next 30 years. Although population across the globe has been expanding, the population growth rate is reducing. High population growths have been witnessed in Sub-Saharan Africa, where the per capita incomes are low and the fertility rates are typically high. China and India qualify as some of the most populous countries while the United States experiences a slowing population growth. Some of the most rapidly growing US cities in terms of population include Jurupa Valley, North Charleston, Indio, Murrieta and Sunrise.
As certain economies progress, the less developed ones are offered support. The regions lagging in economic growth are aided by organizations such as the Bill & Melinda Gates Foundation. Since COVID-19 began, the organization has committed to spending 7 billion in the African region to fight hunger, disease and gender inequality. In November 2022, Bill Gates personally made visits to smallholder farms and healthcare centers in Kenya to better analyze and solve the local issues. Similarly, Berkshire Hathaway’s Chairman Warren Buffett also donates billions to the Gates Foundation, which ultimately uses the money to help poor countries.
Corporations Investing in Emerging Markets
Several multinationals have penetrated developing and underdeveloped countries. A study by Deloitte concludes that bringing internet access to developing economies such as Africa, Latin America, South and East Asia could enhance long-term productivity in these areas by 25%. This economic activity would also contribute $2.2 trillion in additional GDP thereby creating 140 million new jobs and alleviating 160 million people from extreme poverty. A prime example of such a company is Alphabet Inc. (NASDAQ:GOOG) which has been expanding its services in the African region by installing Google Fiber in countries such as Nigeria and South Africa. In October 2022, the company announced its plans to invest $1 billion to support the digital growth in the African economy. Plans to launch the first Google Cloud region in the African continent were also made through which Google Cloud services will be offered to the locals. The cloud region will be set up in South Africa and is expected to contribute more than $2.1 billion to the country’s GDP while creating over 40,000 jobs by 2030.
Amazon.com, Inc. (NASDAQ:AMZN) also invests in global economies. In 2022, the company took an initiative to boost cross-border trade in Vietnam. Amazon.com, Inc. (NASDAQ:AMZN) plans to help 10,000 Vietnamese enterprises with e-commerce between 2022 and 2025. Both online and in-person training courses will be offered to the companies in Vietnam. Over the span of this plan, these companies will also be equipped with knowledge about online commerce to ensure their competitiveness in the global market. Local communities are also supported by the company’s business.
On April 13, Amazon.com, Inc. (NASDAQ:AMZN) reported that many of its fulfillment centers based in the United Kingdom or the EU region have been located in areas that have experienced high unemployment and an industrial downfall. Amazon.com, Inc. (NASDAQ:AMZN) also claims to add 250 additional jobs among suppliers and partner firms through every fulfillment center in these regions.
Microsoft Corporation (NASDAQ:MSFT) has been working to unlock growth in emerging countries by leveraging AI. On October 24, Reuters reported that the tech giant will be investing $3.2 billion to enhance computing capacity by 250% in Australia, one of the rapidly growing global economies. The corporation will be training 300,000 Australians in skills required to advance in a digital economy. It has also been estimated that generative AI could add almost $73 billion annually to Australia’s economy by 2030.
Now that we have taken a look at the global economic outlook and how companies such as Microsoft Corporation (NASDAQ:MSFT), Alphabet Inc. (NASDAQ:GOOG) and Amazon.com, Inc. (NASDAQ:AMZN) transform economic conditions across the globe, let’s take a look at the 10 fastest growing regions in the world.
10 Fastest Growing Regions in the World
Our Methodology:
In order to compile the list of the fastest growing regions in the world, we first needed a definition of regions. Most of the sources on the internet use a very broad definition of regions. Some sources used continents as regions whereas other sources used smaller but still very broad regions. For example, the United Nations used regions such as “Latin America and the Caribbean”, “Asia-Pacific”, “Northern Africa and Western Asia” each of which contain a very diverse group of countries. We decided to use a more granular definition of regions, some of which were obtained from the IMF’s definition, but we also supplemented that with regions such as Northern Europe, Southern Europe, Western Africa, and Southern Africa. The GDP growth rates were obtained from the IMF and represent the latest available data. We calculated the average annual percentage change in real GDP and then sorted the regions from slowest growing to fastest growing. Regions with the same real GDP growths have been mentioned simultaneously.
Finally, we ranked the 10 fastest growing regions in the world in ascending order of their real GDP growth rates as recorded in 2023.
10 Fastest Growing Regions in the World
10. Central America
Annual Real GDP Growth: 3.8%
Central America has recorded a real GDP growth rate of 3.8%, as of 2023. The region qualifies as one of the 10 fastest growing regions in the world. There has been a growing diversification in the regional economies. Central America has also been resilient against economic shocks over the past few years.
Microsoft Corporation (NASDAQ:MSFT), Alphabet Inc. (NASDAQ:GOOG) and Amazon.com, Inc. (NASDAQ:AMZN) contribute to economic growth in various parts of the world.
9. The Caucasus and Central Asia
Annual Real GDP Growth: 4.1%
The Caucasus and Central Asia is another rapidly growing region in the world. As of 2023, the real GDP growth rate is 4.1% in the region. External factors such as the rising inflow of private funds and net remittances from Russia to Armenia, Georgia, and Azerbaijan, added to the region’s economic activity in 2023. Kazakhstan is a major economy in the region which depicted robust economic growth due to an increase in oil production and an expansionary fiscal policy.
8. Southeast Asia
Annual Real GDP Growth: 4.2%
As of 2023, Southeast Asia has a real GDP growth rate of 4.2%. The region is among the 10 fastest growing regions in the world. Indonesia, Thailand, Malaysia, the Philippines, Singapore, and Vietnam are some of the largest economies in the region. Southeast Asia also tends to be a manufacturing hub which helps it account for a major chunk of global exports. The region attracts foreign direct investment as well.
7. Pacific Islands
Annual Real GDP Growth: 4.2%
The Pacific Islands region also qualifies as one of the fastest growing regions in the world. The region has seen a real GDP growth rate of 4.2%, as of 2023. It is known to have substantial natural resources and is moving towards enhancing digital connectivity and trade with international markets. Hence, the region has strong economic potential.
Microsoft Corporation (NASDAQ:MSFT), Alphabet Inc. (NASDAQ:GOOG) and Amazon.com, Inc. (NASDAQ:AMZN) are well established companies that have achieved a global footprint over the years.
6. North Africa
Annual Real GDP Growth: 4.2%
The real GDP growth rate in North Africa is 4.2%, as of 2023. Hence, North Africa is one of the fastest growing regions in the world. Growth in the regional economy is particularly generated by trade and tourism. North Africa also has significant mineral resources and renewable energy reserves which drives sustainable development in the region.
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Disclosure: None. 10 Fastest Growing Regions in the World is originally published on Insider Monkey.