Organizations such as the World Bank and International Monetary Fund (IMF) maintain detailed records on a diverse set of statistics, including unemployment, life expectancy, inflation and literacy. But gross domestic product (GDP) seems to fascinate people the most, possibly because it offers a sort of report card on the health of a country's economy without getting too deep into the weeds of the ins and outs of how economies work.

The Largest Increases in GDP Growth
The IMF has tracked year-on-year changes to GDP since 1980 as part of its World Economic Outlook database project. While obtaining entirely reliable figures on growth is difficult, having three decades worth of information helps point to economies that have experienced explosive growth. The largest increases in GDP growth since 1980, according to the IMF, are as follows:

  • Equatorial Guinea (1997): 150%

  • Equatorial Guinea (1996): 67%

  • Equatorial Guinea (2001): 63%

  • Sudan (1997): 62%

  • Kuwait (1992): 51%

What caused these countries to experience such rapid growth? Sudan was embroiled in a civil war that lasted more than two decades (1983 to 2005), though in 1997 some of the combatants signed agreements that ended - at least temporarily - fighting between government and rebel factions. Kuwait bounced back after being invaded by Iraq, and subsequently liberated by coalition forces, in 1991. Much of this "bounce" came from a restart in oil production that was halted during the fighting.

Of this list, only Equatorial Guinea's growth can be linked to aspects of traditional economic growth: discovery of natural resources, increased privatization and improved labor productivity. The country experienced rapid growth as it took advantage of its natural gas and oil fields, which allowed the country to rapidly increase exports. It also benefited from being one of the larger producers of cacao. In some ways, the growth in Equatorial Guinea is not dissimilar from that of China in that it was taking advantage of an abundance of "low-hanging fruit," meaning unproductive labor and untapped resources.

The Largest Decreases in GDP Growth
Then there's the other end of the growth spectrum. The largest decreases in GDP growth since 1980, according to the IMF, are as follows:

  • Kiribati (1980): -44%

  • Lebanon (1989): -42%

  • Rwanda (1994): -42%

  • Kuwait (1991): -41%

  • Lebanon (1982): -37%

What common factor caused these countries to experience such drastic declines? Political turbulence. Lebanon was at war with Israel in 1980 and was facing its own civil war until 1989, when the Taif Agreement was signed. Kuwait was invaded by Iraq, which precipitated the Gulf War in late 1990. Kiribati declared its independence from the United Kingdom in 1979 and had to deal with the growing pains associated with setting up a new government. Rwanda was plunged into genocide following the assassination of its president in 1994. Economies grind to a halt when conflict erupts inside the country's borders.

Like a boxer knocked down by a vicious right hook, many countries are able to bounce back within a short time frame. Unlike pugilists, however, a return to GDP growth isn't necessarily a result of prowess or skill as much as a return to normalcy. After all, GDP growth is just percent change. Determining if GDP growth is a one-off occurrence or part of a longer trend can remove some of the "noise" associated with events that may only affect a country for a single year. The following list shows countries that ranked in the top 10 for GDP growth for at least five consecutive years between 1980 and 2010.

  • Azerbaijan (2005-2009)

  • China (1992-1996)

  • Equatorial Guinea (1992-2004)

  • Myanmar (2002-2006)

  • Oman (1981-1985)

  • Qatar (2006-2010)

  • Turkmenistan (1999-2005)

Why is Equatorial Guinea the only hot economy to remain standing? The growth of a country's GDP is not the same as the growth of its stock market. Those who invest with an eye for the longer term, whether following a growth or value strategy, consider much more than one year's performance when deciding which companies to invest in. Likewise, looking at such a short horizon when it comes to a country's growth can lead to decisions that are not grounded in reason. Investing in a country based on a single year of GDP growth or contraction is like investing in Apple based on a handful of news stories rather than looking at its long-term prospects.

The Bottom Line
What will the future hold? The IMF estimates that between 2013 and 2017 the average world GDP growth will be 4.3%. It also estimates that China, Bhutan, Timor-Leste and Iraq will be among the fastest growing economies. For those itching to place buy orders, remember that predictions have a nasty habit of falling short.

Related Articles
  1. Investing Basics

    Explaining Trade Liberalization

    Trade liberalization is the process of removing or reducing obstacles that impede the exchange of goods and services between nations.
  2. Investing

    What’s Holding Back the U.S. Consumer

    Even as job growth has surged and gasoline prices have plunged, U.S. consumers are proving slow to respond and repair their overextended balance sheets.
  3. Economics

    The Problem With Today’s Headline Economic Data

    Headwinds have kept the U.S. growth more moderate than in the past–including leverage levels and an aging population—and the latest GDP revisions prove it.
  4. Economics

    Explaining the Participation Rate

    The participation rate is the percentage of civilians who are either employed or unemployed and looking for a job.
  5. Economics

    What Qualifies as Full Employment?

    Full employment is an economic term describing a situation where all available labor resources are being utilized to their highest extent.
  6. Fundamental Analysis

    Is India the Next Emerging Markets Superstar?

    With a shift towards manufacturing and services, India could be the next emerging market superstar. Here, we provide a detailed breakdown of its GDP.
  7. Mutual Funds & ETFs

    ETF Analysis: ETFS Physical Platinum

    Learn about the physical platinum ETF. Platinum embarked on a bull market from 2001 to 2011, climbing to record prices along with other precious metals.
  8. Entrepreneurship

    The Unintended Consequences of Outsourcing

    The outsourcing of labor overseas is a natural result of globalization of world markets and the drive for businesses to cut costs in order to maximize profits.
  9. Stock Analysis

    The Best Stocks to Buy for Less than $10 before Year End

    Learn about the best stocks to buy under $10. These stocks are speculative but have considerable upside given their valuation and market conditions.
  10. Economics

    A Look at Greece’s Messy Fiscal Policy

    Investigate the muddy fiscal policy, tax problems, and inability to institute austerity that created the Greek crises in 2010 and 2015.
RELATED TERMS
  1. Monetary Policy

    The actions of a central bank, currency board or other regulatory ...
  2. Cost, Insurance and Freight - CIF

    A trade term requiring the seller to arrange for the carriage ...
  3. Brazil, Russia, India And China ...

    An acronym for the economies of Brazil, Russia, India and China ...
  4. International Monetary Fund - IMF

    An international organization created for the purpose of standardizing ...
  5. Surplus

    The amount of an asset or resource that exceeds the portion that ...
  6. Inflation

    The rate at which the general level of prices for goods and services ...
RELATED FAQS
  1. What developed countries have the greatest exposure to the Internet sector?

    The Internet sector permeates all developed economies. The McKinsey Global Institute estimates that Internet companies constitute ... Read Full Answer >>
  2. Is Argentina a developed country?

    Argentina is not a developed country. It has one of the strongest economies in South America or Central America and ranks ... Read Full Answer >>
  3. Is Brazil a developed country?

    Brazil is not a developed country. Though it has the largest economy in South America or Central America, Brazil is still ... Read Full Answer >>
  4. Are Social Security payments included in the US GDP calculation?

    Social Security payments are not included in the U.S. definition of the gross domestic product (GDP). Transfer Payments For ... Read Full Answer >>
  5. What is the difference between marginal utility and marginal value?

    Depending on the context, marginal utility and marginal value can describe the same thing. The key word for each is "marginal," ... Read Full Answer >>
  6. In economics, what is an index number?

    Economists often make comparisons between sets of data across time. For example, a macroeconomist might want to measure changes ... Read Full Answer >>

You May Also Like

Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!