The FDI angle:
- Gross domestic product (GDP) growth and foreign direct investment (FDI) are linked to varying degrees over time.
- FDI can contribute to GDP growth by creating more economic activity in a country.
- Why does this matter? GDP growth forecasts are one indicator for the investment attractiveness of economies.
Economic growth forecasts are closely watched indicators. Certainly they have to be handled with a grain of salt, but countries with strong growth prospects also tend to be more attractive to investment as greater potential economic activity can enable higher returns.
The global economy is expected to grow by 3.2% in 2024, according to the IMF’s latest biannual outlook, published in April 2024. This is up from its 2.9% global growth forecast six months earlier. While the IMF fears sluggish global economic growth over the rest of the decade, several developing countries have strong short-term prospects.
The country with the highest forecast for gross domestic product (GDP) growth in 2024 is Guyana. The IMF now expects the South American country’s economy to expand by 33.9% this year — up from its 26.6% projection six months ago. This is due to Guyana riding the wave of an oil and gas boom since a massive offshore discovery in 2015 by ExxonMobil and its partners in the Stabroek block.
The special administrative region of Macao was the only advanced economy to make the list. The IMF foresees Macao’s economy growing by 13.9% in 2024, due to recovery in its gaming sector and private investment into non-gaming activities.
This is, however, significantly lower than the IMF’s 27.2% Macao growth forecast in October 2023 as concerns mount about the impacts of mainland China’s slowing property sector and geopolitical tensions. “The balance of risks to the outlook is tilted to the downside,” wrote the IMF in a March 2024 statement.
Real GDP in the small Pacific island of Palau is forecast to grow by 12.4% in 2024 from a low base, and a further 11.9% in 2025, according to the IMF’s latest outlook. However, these predictions follow “significant scarring” and contraction of Palau’s tourism-dependent economy during pandemic lockdowns.
The construction of two new hotels, higher tourist arrivals and additional actual and planned flights from Greater China, South Korea and Singapore are expected to support Palau’s economic recovery, according to the IMF.
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More data trends you may have missed:
The only other country forecast with double-digit growth prospects in 2024 is Niger. The west African country’s economy is forecast to experience the continent’s highest growth rate of 10.4%. These forecasts are based on a number of assumptions, including the start of oil exports via a pipeline from the Agadem oilfield being developed by China’s state-owned CNPC.
The growth forecasts also assume a gradual return to normality and the lifting of sanctions, which have been imposed on Niger after a military coup in July 2023 by the Economic Community of West African States.
Other countries with 2024 real GDP growth projection rates of at least 6% are spread across the globe. The IMF is bullish about the potential for growth this year in several African nations including Senegal (8.3%), Libya (7.8%) and Rwanda (6.9%).
By far the largest economy to make the IMF’s high growth projection list is India, the world’s most populous country. Other Asian countries with strong growth prospects in 2024 include Mongolia (6.5%), Tajikistan (6.5%) and the Philippines (6.2%).
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