15 Fastest Growing Countries in Europe

Published on February 15, 2023 at 2:15 pm by Insider Monkey Team in Lists, News

In this article, we take a look at the 15 fastest growing countries in Europe. If you want to see more fastest growing countries in Europe, go directly to 5 Fastest Growing Countries in Europe.

Europe is home to many different nations.

Some countries in Europe have very large economies such as Germany, which has a GDP of $4.26 trillion in 2021, ranking fourth in the world in terms of nominal GDP.

Some countries in Europe are also growing fairly rapidly as they continue to develop.

As a whole, Europe has a population of around 743.5 million people in 2022, or more than twice the population of the United States.

Europe includes one of the largest economic blocs in the world in The European Union which has 27 member countries. The 27 country economic bloc, in fact, accounts for around 14% of the world’s total trade in goods and the total value of all goods and services produced in the region was €14.5 trillion in 2021. As an economic bloc, The European Union would be even bigger if the United Kingdom had not left in 2020.

Although the United Kingdom isn’t part of The European Union, it is nevertheless part of Europe.

2023

Like many other parts of the world, the European Union, and other European countries faces economic headwinds this year.

The Russia Ukraine war has led to inflation to increase in many parts of the world as energy prices have increased. With the higher inflation, the U.S. Federal Reserve has raised interest rates substantially in 2022. With higher interest rates, some capital has flowed out of emerging market nations and into Treasury bonds instead. As a result of the capital outflows, many countries around the world are not growing as fast as they otherwise would have.

If the Federal Reserve raises interest rates too much, there is also the potential for an economic slowdown in the United States. Given the United States is the largest economy in the world, a slowdown in the American economy could also weigh on growth in Europe as well.

In terms of how much further the U.S. Federal Reserve might raise interest rates this year, Federal Reserve Chairman Jerome Powell said earlier this month, “The reality is we’re going to react to the data. So if we continue to get, for example, strong labor market reports or higher inflation reports, it may well be the case that we have do more and raise rates more than is priced in.”

Powell added, “We expect 2023 to be a year of significant declines in inflation. It’s actually our job to make sure that that’s the case. My guess is it will take certainly into not just this year, but next year to get down close to 2%.”

If inflation normalizes by 2024, interest rates could potentially in the long term. If that happens, countries in Europe could potentially grow faster given the lower interest rates.

In terms of the latest data for the United States, January’s consumer price index increased 0.5% in the month, translating to a 6.4% annual gain. Accrediting to a survey by Dow Jones, economists were expecting increases of 0.4% and 6.2%, respectively.

When excluding food and energy, January’s core CPI for the United States rose 0.4% monthly and 5.6% from a year ago, versus expectations of 0.3% and 5.5%, respectively.

Although slightly higher than estimates, January’s rise in CPI was lower than the rise in CPI in late 2022.

In terms of economic growth, many of the fastest growing economies in Europe are in Eastern Europe or are transcontinental countries that occupy both Europe and Asia as those economies are emerging markets. Meanwhile, most of the countries in Western Europe have already developed and are growing at a comparatively slower rate.

Methodology

For our list of 15 Fastest Growing Countries in Europe, we used data from the International Monetary Fund’s real GDP growth annual percentage change list for 2023.

The 2023 data is the International Monetary Fund’s projections for 2023 published in October 2022.

Projections can and do change and given they are just projections, the actual growth rate for the year could be different depending on economic developments.

The International Monetary Fund, or IMF, is an international economic agency that tries to further growth and prosperity.

We included transcontinental countries that occupies both Asia and Europe in our list such as Kazakhstan. We also included Iceland in our list. The traditional divide between Asia and Europe is the Ural Mountains, the Caucasus Mountains and the Strait of Istanbul and some countries occupy areas in both geographies.

15 Fastest Growing Countries in Europe

15. Cyprus

2023 Projected Real GDP Growth Rate According to IMF in October: 2.5%

Cyprus is an island in the Mediterranean that has a population of around 912,000 people. In 2021, the country had a GDP per capita of $31,551.82 and a GDP per capita, PPP of $44,109.7, making it one of the more developed countries in Europe. For 2023, the IMF expects Cyprus’ real GDP to expand by 2.5%.

The IMF explains PPP, “One of the two main methods of conversion uses market exchange rates—the rate prevailing in the foreign exchange market (using either the rate at the end of the period or an average over the period). The other uses the purchasing power parity (PPP) exchange rate—the rate at which the currency of one country would have to be converted into that of another country to buy the same amount of goods and services in each country.”

14. Albania

2023 Projected Real GDP Growth Rate According to IMF in October: 2.5%

Albania is a country in Southeast Europe that has a population of around 2.86 million people. In 2022, the country’s economy is expected to have expanded 3.7% and the IMF expects the country’s real GDP to grow another 2.5% in 2023.

13. Azerbaijan

2023 Projected Real GDP Growth Rate According to IMF in October: 2.5%

Azerbaijan is a transcontinental country that occupies both Eastern Europe and Asia. The country is expected to grow 2.5% in 2023 according to the IMF in October and 2.8% according to the Asian Development Bank estimates in September. Oil and gas is a big part of the country’s economy and accounts for a substantial percentage of the country’s exports.

12. Norway

2023 Projected Real GDP Growth Rate According to IMF in October: 2.6%

Although it is already a developed nation, the IMF nevertheless expects Norway’s economy to expand by 2.6% this year. One tailwind for Norway’s economy could be increasing oil and gas production. According to the Norwegian Petroleum Directorate, the country’s oil output could rise by 6.9% in 2023 given the Johan Sverdrup field is expected to ramp up production. As a result, the country’s combined oil and gas output could rise to 4.12 million barrels of oil equivalent per day in 2023, up from the preliminary 3.99 million barrels of oil equivalent per day in 2022.

11. Serbia

2023 Projected Real GDP Growth Rate According to IMF in October: 2.7%

Serbia is a country in Southeastern and Central Europe that grew 7.4% in 2021 and is expected to have grown around 2.5% in 2022. According to government projections in December, Serbia’s government expects to grow 2.5% for 2023.

10. Iceland

2023 Projected Real GDP Growth Rate According to IMF in October: 2.9%

Iceland is one of the less populated nations in Europe given the island nation only had 372,520 residents in 2021. Nevertheless, Iceland has a high GDP per capita of $68,727 in 2021, making it one of the developed nations in Europe. For 2023, the IMF expects the country’s real GDP to expand by 2.9%, ranking Iceland #10 on our list of 15 Fastest Growing Countries in Europe.

9. North Macedonia

2023 Projected Real GDP Growth Rate According to IMF in October: 3%

North Macedonia is another Southeastern European country that the IMF expects to grow faster than Europe as a whole. According to the IMF, North Macedonia’s real GDP is expected to grow by 3% in 2023 after the country’s economy expanded by 4.1% in 2021 and likely over 2% in 2022.

8. Bulgaria

2023 Projected Real GDP Growth Rate According to IMF in October: 3%

Bulgaria is a country in the Balkans with a population of 6.757 million people whose economy is expected to expand by around 3% in 2023 according to the IMF. Although high energy prices and rising interest rates have weighted on consumption, the country nevertheless is expected to be one of the faster growing economies in Europe this year as the country continues to develop.

7. Turkey

2023 Projected Real GDP Growth Rate According to IMF in October: 3%

Turkey, also known as Türkiye, is both a European country and an Asian country given its area on both continents. For the purposes of this list, however, we include Turkey as a European country and as a result the country ranks among the fastest growing economies in Europe. For 2023, the IMF expects the Turkish economy to grow 3% although the recent earthquake could decrease economic growth up to 2 percentage points according to government officials and economists.

6. Romania

2023 Projected Real GDP Growth Rate According to IMF in October: 3.1%

Romania is a Southeastern European country that’s expected to increase its real GDP by 3.1% this year according to the IMF. According to the World Bank, Romania had a GDP of $284.09 billion in 2021, up from a GDP of $192.61 billion in 2011. In 2021, the country had a nominal GDP per capita of $14,858 and a GDP per capita, PPP of $35,869.

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