Harvard’s Center for International Development (CID) released its latest global growth projections, looking at which economies are expected to grow the fastest by 2026.
The growth projections are based on Economic Complexity, a single measure of each country’s economy which captures the diversity and sophistication of the productive capabilities embedded in a country’s exports.
The report found that countries that have diversified their economies into more complex sectors, like India and Vietnam, are those that will grow the fastest in the coming decade. India and Uganda top the list of the fastest growing economies to 2026, predicted at 7.9% and 7.5% annually, respectively.
“After a decade of growth driven by record oil and commodity prices, the researchers find a landscape that has shifted in favor of more diversified economies,” the CID said.
“In sub-Saharan Africa, growth is shifting eastward from commodity-driven West Africa to East Africa, with Uganda, Tanzania (4th), and Kenya (10th) in the top 10 predicted fastest growing countries globally for the coming decade.
“These East African countries have seen labor shift out of farming into limited manufacturing sectors, as expressed in a more diversified export basket. Far from an industrial revolution, structural change has been partial and piecemeal across these economies.”
The countries at the top of the growth list are also some of the world’s poorest, highlighting the ease of growing from a lower initial income base.
This helps explain why India and Pakistan (7th) are predicted to grow faster than China (25th), which has a higher ranking of its economic complexity, but has already realised many of the income gains from a diverse, complex economy.
South Africa is expected to see good growth in this time period – although it is projected to fall notably behind its peers.
While Uganda is placed as one of the countries highest on the list with an expected annual GDP of 7.5%, other African countries such as Egypt (6.63%), Tanzania (6.15%) and Kenya (5.87%) are all expected to perform well.
In contrast South Africa is expected to grow at 4.9% annually until 2026 – well below these countries but also significantly higher than current projections of less than a 1% in 2018.
In March S&P Global Ratings revised its GDP growth forecast for South Africa to 2% for 2018, stating that new leadership and ensuing policy announcements have boosted local and foreign investor confidence in the country.
“A revival in confidence and lower funding costs should support business investment, while a boost to real income from lower inflation bodes well for household spending.
“This should more than offset any drag on growth from the announced fiscal tightening,” said S&P senior economist Tatiana Lysenko