Many of the poorest nations in the world are places where issues such as authoritarian regimes, political turmoil, weak financial institutions, inadequate infrastructure and corruption deter foreign investment despite the fact that many of them are immensely rich in natural resources and have a young, growing population.
5 poorest countries in the world according to the FocusEconomics Consensus Forecast for 2019 nominal GDP per capita.
1. Democratic Republic of Congo
2017 GDP per Capita: USD 439
2019 GDP per Capita (projected): USD 475
2023 GDP per Capita (projected): USD 551
Although the DRC has abundant natural resources, unfortunately with a projected 2019 GDP per capita of USD 475, the country is in the unenviably position of being the poorest country in the world. There has been severe political unrest in recent years, as calls for President Joseph Kabila, who took power after the assassination of his father in 2001, reached a fever pitch in 2018. Kabila was reelected in 2011 in a controversial election and had since postponed elections several times. Finally in August, Kabila declared that he would not seek re-election and named a successor candidate.
The next presidential election has been slated for 23 December and opposition parties selected well-known businessman and veteran legislator, Martin Fayulu, as the unity candidate on 11 November following lengthy talks in Geneva. Fayulu has been one of the fiercest critics of President Joseph Kabila’s tight grip on power. While strong activity in the extractive sectors has supported firm growth, the long-delayed elections have led to a tense business environment and a slowdown in overall activity. Moreover, Katanga Mining (a subsidiary of Glencore) announced a temporary halt to cobalt production at its Kamoto mine, after high levels of uranium were discovered.
Strong demand for key export commodities, including copper and cobalt, is expected to drive growth next year. Moreover, a sharp decline in inflation should buoy domestic demand. Political risks, however, darken the outlook. FocusEconomics analysts have thus far priced-in a peaceful transition of power—which would mark the first since independence in 1960—projecting growth of 3.7% in 2019 and 4.3% in 2020.
2. Mozambique
2017 GDP per Capita: USD 429
2019 GDP per Capita (projected): USD 502
2023 GDP per Capita (projected): USD 648
The second poorest country in the world is Mozambique with a forecasted GDP per capita of USD 502 for 2019. The former Portuguese colony has high hopes of transforming its economy based on prospects of abundant natural gas fields discovered in 2011. The country recently took an important step toward said transformation with the approval of a USD 20 billion Anadarko liquified natural gas plant in early-2018, which envisages exploiting the country’s vast deposits of natural gas.
Economic growth is expected to accelerate this year on the back of higher prices for natural gas. FocusEconomics panelists see growth of 3.5% in 2018 and 4.1% in 2019.
3. Uganda
2017 GDP per Capita: USD 726
2019 GDP per Capita (projected): USD 759
2023 GDP per Capita (projected): USD 959
Uganda finds itself in third place on the list with a 2019 projected GDP per capita of USD 759. Although this represents a large leap from the level of the first two on the list, Uganda is a bit of a strange case. Following the 1986 armed conflict, the ruling political party National Resistance Movement (NRM), enacted a series of structural reforms and investments that led to a period of significant economic growth and poverty reduction all the way up to 2010. In the last five years or so, economic growth has slowed and consequently so has the pace of poverty reduction.
There are a variety of factors that have brought on the slowdown, however, it has been attributed mostly to adverse weather, private sector credit constraints, the poor execution of public sector projects and unrest in their neighbor South Sudan, which has flooded the country with refugees fleeing the country and subdued exports. According to the World Bank, if Foreign Direct Investment accelerates, the banking system stabilizes, and budgeted, capital spending is executed without delays, the economy may start to pick up once again, helping to reduce poverty.
Luckily for Uganda, it appears the FDI is indeed improving according to the latest confiremd data, expanding by double digits in 2017, which bodes well for the economy and poverty reduction in the near future. The downside risk to the outlook is the weakness in the financial system, particularly the low level of credit in the private sector and the high cost of small loans. FocusEconomics panelists see growth of 5.9% in 2019 and 6.1% in 2020.
4. Tajikistan
2017 GDP per Capita: USD 777
2019 GDP per Capita (projected): USD 861
2023 GDP per Capita (projected): USD 1159
Tajikistan is number four on the list of poorest countries with a projected 2019 GDP per capita of USD 861. Tajikistan gained independence after the fall of the Soviet Union, however, a civil war broke out shortly after, which lasted five years until 1997. Since then, political stability and foreign aid have allowed the country’s economy to grow, reducing poverty rather remarkably. According the World Bank, poverty fell from over 83% to 47% between 2000 and 2009 and fell further from 37% to 30% between 2012 and 2016. Since then, poverty reduction, has regrettably stagnated, however, it is projected to fall from 30% to 25% by 2019 as growth picks up.
The economy, which is highly reliant on remittances, is expected to grow strongly in again 2019. Improving labor market dynamics, and a continued robust inflow of remittances supported by Russia’s ongoing economic recovery, should buoy private consumption. Headwinds to the growth outlook include a less supportive external environment owing to tighter global financial conditions and the escalating tit-for-tat trade war. The economy is seen growing 5.7% in 2019 and 5.4% in 2020.
5. Yemen
2016 GDP per Capita: USD 762
2019 GDP per Capita (projected): USD 913
2023 GDP per Capita (projected): USD 1079
Yemen is in the midst of massive civil war that has caused a catastrophic humanitarian crisis, which goes a long way to explaining the country’s place on this list of the poorest countries in the world. Yemen is forecast to have a GDP per capita of USD 913 in 2019. Basic services across the country are on the verge of collapse, as half of the population is currently living in areas directly affected by the conflict and millions of Yemenis have been forcibly displaced.
Yemen is also facing the worst famine in a century, according to the United Nations, with 14 million people at risk of starvation. After peace talks failed to get off the ground in September, fighting only intensified. In recent weeks, the unofficial exchange rate has come under pressure despite a USD 200 million cash injection from Saudi Arabia into Yemen’s Central Bank in October, while Yeminis around the country have protested for better living conditions.
Following three-and-a-half years of civil war, the economy is expected to return to growth for the first time in six years in 2019; albeit thanks in part to a miserably-low base effect. FocusEconomics expects the economy to expand 5.3% in 2019 and 7.6% in 2020.
No comments:
Post a Comment