20 Worst Performing Economies in 2023

Published on July 31, 2023 at 3:58 pm by Ali Hassan in Lists, News

In this article, we will be taking a look at the 20 worst performing economies in 2023. To skip our detailed analysis of the global economies, you can go directly to 5 Worst Performing Economies in 2023.

Global Economic Outlook

The global economy is facing a transition from the massive economic downfall during the pandemic and Russia’s war against Ukraine. The global economy was negatively impacted by the supply chain issues following the lockdown during the pandemic. However, supply chain disruptions are shrinking and businesses are improving around the world. At the same time, the monetary policies of central banks should begin to produce the outcomes, with the inflation rate expected to move back toward its target. In 2023, the global economy is expected to slowly get back on track.

The International Monetary Fund (IMF) in its July 2023 World Economic Outlook highlights that global growth will drop to 3% in both 2023 and 2024, falling from an estimated 3.5% in 2022. Global inflation will continue to decrease but at a much slower rate than initially anticipated, from 8.7% in 2022 to 6.8% in 2023. The core inflation is expected to remain moderate, and inflation forecast for 2024 has been revised upward. The main cause behind this was the COVID-19 pandemic and trade tensions after the Russia-Ukraine war. During the press briefing of the July 2023 World Economic Outlook, the following comments were made regarding economic development:

“The global economy continues to gradually recover from the pandemic and Russia’s invasion of Ukraine, but it is not yet out of the woods. The COVID-19 health crisis is officially over, supply chain disruptions have returned to pre-pandemic levels, economic activity in the first quarter of the year proved resilient, and labor markets are quite tight in many places. Energy and food prices have come down faster than expected from the war-induced peaks. And financial instability following the March banking turmoil remains contained thanks to forceful actions by the U.S. and Swiss authorities.

Stronger growth and lower inflation than expected are welcome news, suggesting the global economy is headed in the right direction. Yet growth remains low by historical standards, and while some adverse risks have moderated, the balance remains tilted to the downside, and it is too early to celebrate. There are growing signs that global activity is losing momentum. The global tightening of monetary policy has brought interest rates into contractionary territory. This has started to weigh down on activity, slowing the growth of credit to the nonfinancial sector, increasing households’ and firms’ interest payments, and putting pressure on real estate markets.

Second core inflation, which excludes energy and food prices, remains well above central bank targets, and is expected to decline only gradually. In advanced economies, core inflation is expected to remain unchanged at 5.1 percent this year before declining to 3.1 percent in 2024. Clearly, the battle against inflation is not yet won.

Key to inflation’s persistence will be labor market developments and wage profit dynamics. Despite tight labor markets, overall wage inflation has increased, but remains behind price inflation in most countries. The reason is simple and has little to do with so called greedflation. Prices adjust upwards faster than wages when nominal demand far exceeds what the economy can produce. As a result, real wages have declined. If labor markets remain strong, we should expect and welcome real wages recovering lost ground. Indeed the gap between nominal wage growth and price inflation has started to close. Because firms’ profit margins have grown robustly in the last two years, we remain confident that there is room to accommodate the rebound in real wages without triggering a wage price spiral. With inflation expectations well-anchored in major economies and the economy slowing, market pressures should help contain the passthrough from labor cost to prices.”

In the medium term, overall economic growth is expected to slow down. Especially, developed economies are expected to face a slowdown in their economy, as the growth is expected to fall from 2.7% in 2022 to 1.5% in 2023. In comparison, the growth in developing economies and emerging markets is expected to remain stable at 4% in 2023 and 4.1% in 2024. According to the World Economic Forum’s Chief Economists’ Outlook, the global economy seems gloomy. The majority of chief economists project moderate or strong growth in the Middle East, North Africa, and South Asia. Some of the most important economies in the world from the following regions include Saudi Arabia, United Arab Emirates, India, and Japan.

How are Businesses Recovering?

After a long halt during the pandemic, companies from different sectors are making strong progress. Most importantly, it depends on the sector in which a company is operating. Some sectors have performed exceptionally well while some have been struggling. So far in 2023, the worst performing sectors have been healthcare, energy, and utilities. For instance, Pfizer Inc. (NYSE:PFE) shares have plunged almost 30% since the start of the year, as of July 31. Whereas, consumer discretionary and technology have outperformed other sectors in the market. As we mentioned earlier, the tech sector is having a great time this year. Most investors are betting on tech stocks regardless of high inflation concerns. One of the main reasons why the tech sector has skyrocketed is the ongoing artificial intelligence (AI) hype. Alphabet Inc. (NASDAQ:GOOG)’s Google is making massive progress in AI as the customers are highly interested in its cloud services. Google’s CEO Sundar Pichai believes that in the long-term, AI will potentially expand Google’s total addressable market and allow them to win new customers. Alphabet Inc. (NASDAQ:GOOG) has some big tech competitors in AI including Microsoft Corporation (NASDAQ:MSFT), Meta Platforms, Inc. (NASDAQ:META), and Amazon.com, Inc. (NASDAQ:AMZN).

On July 28, Alphabet Inc. (NASDAQ:GOOGL) released its earnings for the second quarter of 2023. The company posted earnings per share of $1.44, beating the expectations of $0.10. The company posted revenue of $74.60 billion and surpassed the consensus by $1.85 billion. Google continues to progress with its cloud business and advance in AI. With so much hope around Google’s AI technology and future AI plans, Alphabet Inc. (NASDAQ:GOOGL) has soared 10% this week. During the Q2 2023 earnings call, the company made the following comments:

“The momentum across the Company drove our results this quarter. We delivered solid performance in Search and YouTube and ongoing strong growth in Cloud, where we remain focused on long-term value creation. And we continue our important work to operate more efficiently, creating durable savings to fund investments in our biggest priorities.

I’ll talk about this momentum, including our continued leadership in AI and our excitement about the evolution of Search. At I/O, we shared how we are making AI helpful for everyone in four important ways: first, improving knowledge and learning. This is our seventh year as an AI-first company, and we intuitively know how to incorporate AI into our products. Large language models make them even more helpful, models like PaLM 2 and soon Gemini, which we are building to be multimodal. These advances provide an opportunity to reimagine many of our products, including our most important product, Search. We are in a period of incredible innovation for Search, which has continuously evolved over the years. This quarter saw our next major evolution with the launch of the Search Generative Experience, or SGE, which uses the power of generative AI to make search even more natural and intuitive.

User feedback has been very positive so far. It can better answer the queries people come to us with today, while also unlocking entirely new types of questions that Search can answer. For example, we found that generative AI can connect the dots for people as they explore a topic or project, helping them weigh multiple factors and personal preferences before making a purchase or booking a trip. We see this new experience as another jumping off point for exploring the web, enabling users to go deeper to learn about a topic. I’m proud of the engineering excellence underlying our progress. Since the May launch, we’ve boosted serving efficiency, reducing the time it takes to generate AI snapshots by half. We’ll deliver even faster responses over time.

We have made good progress in data center machine efficiency, which will pay dividends as we continue to invest in AI. We continue to slow our expense growth and pace of hiring and ensure our teams are aligned to our highest priorities. This quarter, we reallocated a number of teams, including aligning Waze’s ad sales with our existing business organization. We are combining various engineering efforts across core infrastructure and cloud. Products like Bard and SGE are being built by small fast-moving teams that have been reallocated to these high-priority efforts. Overall, we are actively moving people to higher priority activities within the Company, and we continue to optimize our real estate footprint for current and future needs. Next, Google Cloud.

We see continued growth with Q2 revenue of $8 billion, up 28%, and operating profit of $395 million. Our AI-optimized infrastructure is a leading platform for training and serving generative AI models. More than 70% of gen AI unicorns are Google Cloud customers, including Cohere, Jasper, Typeface and many more. We provide the widest choice of AI supercomputer options with Google TPUs and advanced NVIDIA GPUs, and recently launched new A3 AI supercomputers powered by NVIDIA’s H100. This enables customers like AppLovin to achieve nearly 2 times better price performance than industry alternatives. Our new generative AI offerings are expanding our total addressable market and winning new customers. We are seeing strong demand for the more than 80 models, including third-party and popular open source in our Vertex, Search and Conversational AI platforms with a number of customers growing more than 15x from April to June.”

Some of the best tech stocks to buy according to hedge funds include Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN), Meta Platforms, Inc. (NASDAQ:META), and Alphabet Inc. (NASDAQ:GOOGL).

20 Worst Performing Economies in 2023

Our Methodology:

To find data for the 20 worst performing economies in 2023, our focus was on the economies with the lowest real GDP growth rate with annual percentage change. The real GDP growth rate reflects the economic growth of an economy expressing its GDP from one period to the next. We ranked the list from the IMF’s database which tracks the real GDP growth rate. The economies with the same real GDP growth rate are differentiated based on their GDP at current prices, which was taken from the IMF’s database of GDP at current prices. The country with lower GDP at current prices is ranked higher and so on. The list may not include countries such as Western Sahara, Syria, and Lebanon as their data is not available. The lists are then ranked in descending order of the aforementioned metric. Here are the 20 worst performing economies in 2023.

20 Worst Performing Economies in the World

20. Austria

Real GDP Growth Rate of the Country (2023): 0.4%

Following a strong rebound of the economy in 2022, Austria’s GDP is expected to have plunged by -0.3% in Q1 2023. The significant decrease in goods exports and rise in energy prices has negatively affected the economy. Austria has a GDP of $515.2 billion and is ranked 20th on our list of worst performing economies in 2023.

Top technology companies with a stellar performance in 2023 so far include Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN), Meta Platforms, Inc. (NASDAQ:META), and Alphabet Inc. (NASDAQ:GOOG).

19. Puerto Rico

Real GDP Growth Rate of the Country (2023): 0.4%

Puerto Rico is a U.S. territory and its economy is hammered due to the loss of federal tax provisions and massive debts. In addition, the country’s economy has suffered heavily from natural disasters, on top of the government’s mismanagement. Puerto Rico has a GDP of $120.84 billion and ranks among the worst performing economies in 2023.

18. Latvia

Real GDP Growth Rate of the Country (2023): 0.4%

Latvia’s economy is suffering due to high inflation and delays in public investment programmes. The country has a GDP of $47.4 billion and ranks 18th on our list of the worst performing economies in 2023.

17. Poland

Real GDP Growth Rate of the Country (2023): 0.3%

Poland is facing severe consequences of the Russia-Ukraine war. The high inflation has negatively affected the real income of individuals and the country’s private consumption is expected to decline in 2023. Poland has a GDP of $748.89 billion and is ranked 16th among the worst performing economies in 2023.

16. Haiti

Real GDP Growth Rate of the Country (2023): 0.3%

Haiti faces serious threats from political instability and increasing violence. The country’s economic and social development continues to suffer from increasing social insecurity and vulnerability to natural hazards. Haiti has a GDP of $26.58 billion and makes it to the list of worst performing economies in 2023.

15. Argentina

Real GDP Growth Rate of the Country (2023): 0.2%

Argentina is going through one of the worst economic crises. The country’s economy is affected by strict import controls. While the inflation rate is unprecedented considering the vulnerability of the economy. Argentina is one of the biggest Latin American economies with a GDP of $641.1 billion and ranks among the worst performing economies in 2023.

14. South Africa

Real GDP Growth Rate of the Country (2023): 0.1%

South Africa’s high public debt level restricts the government’s potential to retaliate against economic shocks and fulfill social and development needs. The COVID-19 pandemic has created daunting socio-economic challenges for the country. South Africa has a GDP of $399.02 billion and ranks 14th on our list of the worst economies in 2023.

13. Denmark

Real GDP Growth Rate of the Country (2023): 0%

Denmark’s economy is recovering gradually post-pandemic. The country’s private consumption is expected to recover as consumer confidence improves. Denmark has a GDP of $405.63 billion and is ranked one of the worst performing economies in 2023.

12. Finland

Real GDP Growth Rate of the Country (2023): 0%

The economic growth in Finland continues to experience weak business and consumer confidence. In 2023, high inflation and strict financing conditions will have a massive impact on consumption in Finland. The country has a GDP of $301.67 billion and is ranked 12th on our list of the worst performing economies in 2023.

11. Germany

Real GDP Growth Rate of the Country (2023): -0.1%

One of the biggest European economies is stagnating as Germany technically enters a recession phase. As of July, KPMG shared Germany’s economic forecasts for 2023 ranging from -0.5% to +0.4%. With the country’s GDP of $4.31 trillion, Germany remains one of the worst performing economies in 2023.

10. United Kingdom

Real GDP Growth Rate of the Country (2023): -0.3%

One of the biggest powers in the world, the United Kingdom is coming across paramount economic hindrances. Exposed to high gas prices, increasing interest rates and static trade activities are causing the economy to fall. The United Kingdom has a GDP of $3.16 trillion and ranks among the worst economies in 2023.

9. Lithuania

Real GDP Growth Rate of the Country (2023): -0.3%

Just like most of the other European economies, Lithuania has faced the consequences of Russia’s invasion of Ukraine. The economic activity is hammered by a contraction in private consumption. The supply chain disruptions have forced input prices to hike. Lithuania has a GDP of $78.35 billion and ranks ninth on our list of the worst performing economies in 2023.

8. Sweden

Real GDP Growth Rate of the Country (2023): -0.5%

The rise in energy prices and interest rates affecting domestic demand is expected to slow down the economic growth of Sweden. The country has a GDP of $599.05 billion and ranks among the worst performing economies in 2023.

7. Czech Republic

Real GDP Growth Rate of the Country (2023): -0.5%

The Czech Republic after a modest economic performance in 2022 is following a downward trajectory. The contraction in the economy is driven by increased price pressure amidst compact domestic financial conditions. The Czech Republic has a GDP of $330.48 billion and is ranked seventh on our list of the worst performing economies in 2023.

6. Yemen

Real GDP Growth Rate of the Country (2023): -0.5%

One of the struggling economies in the Middle East, Yemen faces long-term economic challenges. The country has major infrastructural damages caused by war over the past decade. Yemen has a GDP of $19.53 billion and ranks sixth on our list of the worst performing economies in 2023.

Some of the biggest tech companies in the world include Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN), Meta Platforms, Inc. (NASDAQ:META), and Alphabet Inc. (NASDAQ:GOOG).

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