In this article, we will be taking a look at the 15 fastest-declining economies in the world in 2024. To read about similar topics, you can also check out the 20 Countries with the Highest Annual GDP Growth in the World.
The global economy is experiencing critical economic challenges as growth is projected to slow to 2.6% in 2024 which is just above the recession threshold of 2.5%. This marks the third consecutive year of subpar growth compared to the pre-pandemic average of 3.2%.
Speaking of recession, Japan has avoided it in the technical sense, but the economic picture looks bleak. The country’s GDP shrank for two consecutive quarters. In Q4 2023, the economy contracted by 0.4% year-over-year, following a 3.3% decline in the previous quarter. Consequently, Japan has lost its position as the world’s third-largest economy to Germany, with Japan’s GDP at about $4.2 trillion and Germany’s at $4.4 trillion. Economists had anticipated a 1% growth for Japan in Q4. The yen’s 9% depreciation against the dollar in 2023 contributed to this shift, despite boosting Japanese export competitiveness.
Apart from Japan, the United Kingdom has also been in the limelight for fighting the recession. According to Chancellor Jeremy Hunt, in terms of inflation, the UK currently boasts a lower rate compared to both the eurozone and the United States. However, despite this improvement, prices remain significantly higher than a year ago, with inflation measured at 2.3% in the UK, 3.4% in the US, and 2.4% in the eurozone.
Regarding growth projections, the IMF forecasts that the UK economy will outpace several European counterparts over the next six years such as France, Germany, Italy, and Japan. The IMF predicts an 8.8% increase in the UK’s gross domestic product (GDP) by the end of 2029, compared to 8.3% for France, 5.7% for Germany, 3.5% for Italy, and 4.4% for Japan.
However, despite the economic challenges globally, there are positive aspects to the global economic outlook. For instance, private consumption is expected to increase by approximately 4% which will outpace total income growth of 2.6%. This consumption boost, though primarily driven by borrowing, can stimulate economic activity. Additionally, some regions show promising growth rates; India, for example, is projected to grow by 6.5% in 2024, supported by strong public investment and a thriving service sector. According to the annual real GDP growth rates (as of April 2024), India is one of the top 10 fastest-growing economies in the world. Similarly, China is targeting around 5% growth by capitalizing on its strong manufacturing and trade sectors.
As far as economic trends in 2024 are concerned, inflation across OECD countries is anticipated to decline from 6.9% in 2023 to 5.0%, continuing to 3.4% in 2025. This decrease will be driven by stringent monetary policies and decreasing pressures on goods and energy prices. By the end of 2025, most major economies are expected to achieve central bank inflation targets. The United States is projected to experience GDP growth of 2.6% in 2024, which will slow to 1.8% in 2025 due to high borrowing costs and tempered domestic demand. Nevertheless, the US is known to have one of the best economies in the world in 2024. The euro area, on the other hand, will see a gradual rebound fueled by improved real household incomes, tight labor markets, and lower policy interest rates, with GDP growth forecasted at 0.7% in 2024 and 1.5% in 2025.
Despite the growing US economy, misconceptions still persist among the public. A recent Harris poll revealed that 55% of Americans believe the economy is shrinking, and 56% think the US is in a recession, though GDP has been steadily rising, with a brief contraction in 2022 that the NEBR did not classify as a recession. Furthermore, 49% believe unemployment is at a 50-year high, despite it being under 4%, a near half-century low.
Inflation has been an equally worrying trend in the US. Although it peaked at 9.1% in June 2022, it has since decreased and continues to fluctuate between 3% and 4%. In April 2024, the rate dropped from 3.5% to 3.4%, yet 72% of respondents think inflation is increasing. The Federal Reserve’s interest rate hikes to control inflation have contributed to public uncertainty, with consumer confidence hitting a six-month low in May 2024.
Apart from interest rates, labor market policies and household incomes, improving women’s health have a direct implication for economy. In fact, it can potentially add at least $1 trillion annually by 2040, according to a World Economic Forum report. The research highlighted that each $1 invested in women’s health can generate $3 in economic benefits. Women, who spend an average of nine years in poor health, could gain an additional seven healthy days annually, or over 500 days across a lifetime, if the health gap is closed.
Also see 15 Fastest Declining Countries in Asia and 15 Fastest Declining States in the US.
Image by Gerd Altmann from Pixabay
Our Methodology
To identify the fastest declining economies in the world in 2024, we averaged the annual GDP growth rates of 50 countries for the last 5 years i.e., from 2019 to 2023. The 15 countries with the lowest GDP growth rates were eventually selected. The data on the GDP growth rate for each year except 2022 was obtained from the International Monetary Fund’s database. The countries have been presented below in ascending order of average GDP growth rates.
Please note that for the year 2022, we relied on the GDP growth rates from the World Bank for all countries as the IMF didn’t have data for some countries for 2022.
15. Solomon Islands
Average GDP Growth: -0.60%
The World Bank’s report projects a 2.8% growth for the Solomon Islands’ economy in 2024 following a 1.9% growth in 2023 after a 4.1% contraction in 2022. This rebound is driven by the Pacific Games and major infrastructure investments in energy and transport, making it the 15th fastest-declining economy in 2024.
14. Samoa
Average GDP Growth: -0.60%
In our list of fastest declining economies in the world in 2024, Samoa ranks 14th. It is interesting to note that the economy of Samoa heavily relies on development aid, remittances, tourism, agriculture, and fishing, with a nominal GDP of $844 million as of 2022. Agriculture, including fishing, constitutes 90% of exports, featuring fish, coconut oil, nonu products, and taro. The manufacturing sector, primarily processing agricultural goods, represents 22% of GDP but employs less than 6% of the workforce.
13. West Bank and Gaza
Average GDP Growth: -0.98%
The economies of the West Bank and Gaza are severely strained. The West Bank’s economy is heavily reliant on wages from Palestinian labor in Israel and is struggling due to restrictions imposed after recent conflicts. On the other hand, Gaza faces even harsher conditions with high unemployment, infrastructure damage, and blockade-related challenges.
12. South Sudan
Average GDP Growth: -1.08%
South Sudan is facing a severe humanitarian crisis as 9 million people, including refugees, are projected to have critical needs in 2024. An estimated 7.1 million will need food assistance during the April to July lean season. Women and children will be the most affected. Moreover, the recent conflict in neighboring Sudan has worsened the situation which has led to an influx of 640,688 returnees, refugees, and asylum seekers into South Sudan.
11. Equatorial Guinea
Average GDP Growth: -1.62%
Despite a 3.1% GDP growth in 2022 and a budget surplus increase to 4.8% of GDP, this country faces a major decline due to persistent high urban poverty at 67%, inflation at 5%, and reduced household purchasing power.
It is also interesting to note that Equatorial Guinea’s energy economy is deeply intertwined with its oil and gas sector, which has been the backbone of its financial stability. At its peak in 2005, oil production reached approximately 380,000 barrels per day which was largely due to the Zafiro oil field discovered by Mobil Corporation in 1995. However, by 2022, production had declined to around 119,000 barrels per day, according to the GIS Reports.
10. Haiti
Average GDP Growth: -2.08%
Haiti’s economy has contracted for five consecutive years: -1.7% in 2019, -3.3% in 2020, -1.8% in 2021, -1.7% in 2022, and -1.9% in 2023. Although tax revenue collection improved in 2023, the tax-to-GDP ratio remains low at 6.3% and high annual inflation persists at 44.2% . With growing insecurity and ongoing political instability, Haiti is expected to face another year of negative growth in 2024, projected at -1.8% by the World Bank.
With an average GDP growth rate of -2.02%, Haiti is one of the top 10 fastest-declining economies in the world in 2024.
9. Sri Lanka
Average GDP Growth: -2.32%
Sri Lanka’s economic decline has become evident more than ever, especially when it observed a GDP contraction of 7.8% in 2022 and when poverty rates increased to 25.9% in 2023. Despite projected growth of 2.2% in 2024, the country is fighting with high poverty, rising income inequality, and reduced labor force participation. Hence, Sri Lanka ranks 9th in our list of fastest-declining economies in the world.
8. Myanmar
Average GDP Growth: -2.76%
Myanmar’s economy has declined sharply since the 2021 military coup. In 2023, the GDP growth was only 2-3% which explains why Myanmar ranks #8 in our list.
According to a recent UN Development Program report, the middle class has shrunk by 50% over the past three years. The economic instability has led to rampant inflation, forcing households to cut down on essential expenditures like food. This dire situation has resulted in nearly half of Myanmar’s population living below the national poverty line, which is set at a mere 76 cents per day.
7. Timor Leste
Average GDP Growth: -3.76%
Timor-Leste’s economy is facing a severe downturn primarily due to the depletion of its oil and gas reserves. With a projected 7% decrease in real GDP for 2024 which is largely driven by the winding down of production at the Bayu-Undan offshore field, the country’s economic prospects are concerning. While there’s a forecasted 4% growth in 2025, it relies heavily on government investment in infrastructure.
6. Ukraine
Average GDP Growth: -4.26%
The European Bank for Reconstruction and Development (EBRD) has predicted Ukraine’s GDP growth at 3% in 2024, down from 5.3% in 2023 after a sharp decline in 2022 due to the war. While a record harvest and increased defense spending boosted 2023’s growth, ongoing war damage, labor shortages, and limited investments are expected to constrain 2024 growth.
5. Afghanistan
Average GDP Growth: -4.60%
Since the Taliban takeover in 2021, Afghanistan’s economy has contracted by 27%, according to the UN News. Unemployment has also doubled and only 40% of the population has access to electricity. Restrictions on women and girls have further hindered economic progress as the female employment rate in the public sector has dropped to around 6%. Natural disasters, like the October 2023 earthquakes in Herat have further challenged the situation. Currently, 69% of Afghans face subsistence insecurity and thus, lack basic resources.
With an average GDP growth rate of -4.60 %, Afghanistan is one of the top 5 fastest declining economies in the world in 2024.
4. Sudan
Average GDP Growth: -5.10%
Sudan’s economy had already been stagnant from years of sanctions and deep corruption but if now faces a dire collapse. Since fighting erupted on April 15, critical infrastructure in Khartoum, the economic hub, has been devastated and has shut factories, banks, and markets. The Sudanese pound has depreciated by 600% against the dollar since 2018 and has thus, affected inflation and caused severe shortages of basic goods.
3. Palau
Average GDP Growth: -6.38%
High inflation in Palau has increased from 5% to 25% in just two years that has eroded purchasing power and also ridiculously increased the cost of living. The unemployment rate has also skyrocketed, now at 18% compared to 7% five years ago. Additionally, the national debt has ballooned to 120% of GDP, up from 80% three years ago, which has strained public finances and reduced the government’s ability to invest in economic growth. All of these factors explain the economic failure of the country.
2. Venezuela
Average GDP Growth: -8.94%
Venezuela is struggling with severe economic challenges, with hyperinflation reaching 344% in 2023 which drastically eroded purchasing power. The economy has contracted by over 75% since 2013 which has led to widespread poverty, with over 96% of the population living below the poverty line. Oil production has dropped to 700,000 barrels per day, down from 2.3 million in 2013. These economic woes are worsened by international sanctions, a collapsed healthcare system, and a major brain drain, as over 7.7 million citizens have emigrated.
1. Lebanon
Average GDP Growth: -9.96%
Lebanon’s economy has experienced a dramatic collapse, with its currency losing approximately 95% of its value since the crisis began in 2019. This devaluation has locked most depositors out of their savings and pushed over 80% of the population below the poverty line. The crisis is rooted in decades of excessive spending and corruption by the ruling elite, compounded by the banking sector’s heavy lending to the state that has resulted in financial system losses above $70 billion.
The situation is further worsened by external pressures, such as the ongoing conflict with Israel and the war in Gaza, which have led to internal displacement and infrastructure damage. The IMF has indicated that while recent fiscal and monetary reforms have reduced inflation, they are insufficient for recovery. Bank deposits remain frozen, and the banking sector’s paralysis continues even in 2024, making it the fastest-declining economy in the world today.
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