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With the second half of 2018 fast approaching, there is no better time to examine the growing and shrinking economies in 2018. For expatriates, looking at economies which show the most significant growth and shrinking rates, may give an insight as to where their next relocation destination will be. Here at Santa Fe Relocation, we are taking a closer look at the unexpected highs and the lows of the year so far.
Growing economies in 2018
To begin with, we are looking at the economies with significant growth expected this year.
Until 2015, China was the world’s fastest-growing economy, with growth rates averaging 10% over a 30 year period. While China is no longer the world’s fastest-growing major economy, it is expected to grow by 5.8% in 2018. 2015 was the year that China dominated the world’s economies, but despite this growth slowing, China’s economy grew by 6.9% in 2017. The prosperity of the Chinese economy is often deemed to be attributed to the low cost of labour, but as the government issued new labour laws in 2008 leading to much higher salaries, the country quickly lost its competitive advantage. Despite China losing its ‘emerging market’ status as a result of slowing growth, it is expected to remain as the world’s second biggest economy, and its stability is somewhat uncanny compared to a number of other economies around the world.
With oil prices on the rise once again and the country’s oil production expanding, Ghana is certainly on track to making a remarkable claim for a country amid poverty not long ago. According to number financial institutions including the World Bank and the Brookings Institution, Ghana is likely to have one of the world’s fastest-growing economies in 2018. The country’s growth is expected to lie between 8.3% and 8.9% in 2018, and if this expectation is met or exceeded, the country has the potential to encompass India’s economic growth.
Having been dubbed the world’s fastest-growing major economy in February 2018, the country now ranks above China. At time of writing, India was the fastest growing economy at 7.4% and this figure is expected to rise by 0.4% to 7.8% in 2019. Despite recovering from the diminishing effects of the introduction of the Goods and Service Tax and demonetisation, the IMF’s Asia and Pacific Regional Economic Outlook report stated that “the recovery is expected to be underpinned by a rebound from transitory shocks as well as robust private consumption.”
Shrinking economies in 2018
With China, Ghana and India taking the lead as the top growing economies in 2018, here, we are exploring those that are the worst-performing so far.
In 2017, the World Bank estimated that the gross domestic product growth in Venezuela was -11.9%, and so it is no surprise that the Venezuela economy is expected to shrink by 4.2% in 2018. Critics believe that the country’s poor economic climate is self-inflicted through gross mismanagement, which has resulted in hyperinflation and ultimately sovereign-debt default which the country is struggling to recover from.
The World Bank has also warned that US trade protectionism and the likelihood of natural disasters occurring could also lead to a growing economic crisis.
In the wake of natural disasters, including the powerful tropical cyclone which hit Puerto Rico and Dominica in 2017, Puerto Rico’s economy and population has suffered and is set to continue to shrink. The governor of Puerto Rico has yielded a revised plan that outlines that the U.S. Caribbean territory’s economy may shrink by 11% by 2019, with 2018 predicted to decline by no less than 8%. As an overseas territory of the United States, the country is facing a demographic disaster that, if not handled correctly, could lead to devastating results such as millions leaving for the U.S. mainland.
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