Fastest GDP per capita growth rate

 From Visual Capitalist

Over the last 35 years, some countries have seen extraordinary increases in economic output per person, ranging from export-driven Asian economies to resource-rich nations experiencing major commodity booms.

This graphic ranks countries by real GDP per capita growth from 1990 to 2025, based on World Bank data. Figures account for inflation and differences in purchasing power across countries.

Guyana’s extraordinary growth is closely tied to its offshore oil boom. Oil production began in 2019 and reached roughly 225 million barrels in 2024, transforming the economy of a country with fewer than one million people.

That helps explain why Guyana’s real GDP per capita has risen 1,549% since 1990, putting it ahead of every other country in the ranking.

China’s rise stands out because of the scale involved. Nearly 800 million people have been lifted out of extreme poverty over the past four decades, accounting for nearly three-quarters of the global reduction.

The broader ranking shows that China is part of a much larger Asian growth story. Vietnam, India, Bangladesh, and South Korea all rank among the world’s fastest-growing economies by real GDP per capita since 1990.

Unlike Guyana’s recent oil-driven surge, much of this growth unfolded over decades of industrialization and trade expansion. Asian countries make up nearly half of the global top 25.

The U.S. ranks 88th globally, with real GDP per capita rising 73% between 1990 and 2025. Among G7 economies, it recorded the largest increase over the period.

By comparison, GDP per capita grew 61% in the UK, 48% in Germany, 43% in Canada and France, and 34% in Japan.

One factor behind the U.S. advantage has been stronger productivity growth, helping it pull ahead of many advanced-economy peers. The largest gains, however, have occurred elsewhere, highlighting how much the global growth landscape has shifted since 1990.

This graphic shows the growth in average per person GDP, i.e., GDP divided by the population.   But in the US, for example, most of the growth over the last 40 years has accrued to the top 10% and top 1%.  What would be very interesting is to see median per person GDP growth.   The point where half is above and half below is the median.  An example.  In a village of 100 people, 99 earn £100 per year, and 1 earns a £10,000.   The average (mean) income for the village is £199, which is clearly meaningless.  The median, however, is £100, which is much more meaningful.   And it is the median income/per person GDP which matters for ordinary people.  I suspect median GDP per person in the US has grown more slowly than in other G7 countries.

No, Europe isn't falling behind the USA

Hint:  No. 

From TLDR

The perils of comparing economies. And excellent insight into the problems.

 

US monthly GDP still trending up

 I calculate a monthly GDP proxy, called the QCI.  It is an unweighted average of industrial production, non-agricultural employment, and the volume of retail sales.  

The name comes from Quick Coinciding Index, and I called it that because when I first started calculating my coinciding indices, I used an IBM 286, which had a very small memory, and couldn't cope with the large arrays I was using in my calculations.  The QCI was just a simple unweighted index, which the limited memory of my 286 could cope with without the need to roll arrays from memory out to the hard disk, and so was much quicker to calculate!

In most countries, a QCI correlates well with GDP, and its latest data are available a couple of months before GDP data are released.

The chart below shows the YoY % changes in real GDP and in my QCI.  The gap over the last year is caused by post-covid "revenge spending" on services.  That has recently started to fizzle out, so headline GDP growth will likely slow, even as the QCI picks up.

Note the weather-related slump in Jan 2024.

Lights at night suggest dictators lie

From The Economist

Benito Mussolini was a tyrant, but at least he made the trains run on time. Or so the story goes. Dictators are often seen as ruthless but effective. Official gdp figures support this view. Since 2002 average reported economic growth in autocracies has been twice as fast as in democracies.

But in fact, Mussolini’s trains often ran late—and dictators’ economic stewardship may not be as effective as they claim. New research finds that autocrats greatly overstate their countries’ economic growth.

In a peer-reviewed article that will be published this month, Luis Martinez, an economist, investigated dictators’ gdp-growth figures. To do so, he first obtained data on the brightness of countries’ lights at night, as measured by satellites, a well-known proxy for gdp. He combined it with data from Freedom House, a think-tank, on countries’ political systems. Assuming that the most democratic countries reported growth figures accurately, he then used the satellite data to estimate if other countries under- or over-stated theirs.

The data showed that dictators’ reported gdp tended to grow much faster than satellite images of their countries would suggest. This could not be explained by their economies being based on different industries from other countries, or that people there had lower average incomes.

Curious patterns in the data suggest manipulation as the cause. Mr Martinez found that the mismatch between satellite and gdp data did not appear in dictatorships until they were too rich to receive some types of aid: only showing up when governments would not forfeit money. The irregularities were most prevalent in the parts of gdp figures that are easiest to manipulate such as investment and government spending, and was bigger when these countries’ growth was low compared with others’. And as countries moved towards or away from dictatorship, their numbers grew more or less suspicious.

The differences between reported and estimated gdp-growth rates were large. While others have found similar relationships, Mr Martinez was able, using satellite data up to 2013, to estimate the bias more precisely. In updated figures he has provided to us, cumulative gdp growth between 2002 and 2021 in countries “not free” is nearly cut in half: from 147% to 76%.

The explanation is probably simple: opportunity and motive. Part of what makes dictatorships dictatorships is that questioning the official line is dangerous. At the same time, autocratic regimes have a strong incentive to report healthy growth: its absence may be taken as a sign of incompetence or weakness, which dictators can ill afford.

Autocrats’ subordinates face similar incentives. In a related study Jeremy Wallace, a researcher, found misreporting by Chinese provinces, too. As he notes, a leaked American diplomatic cable from 2007 revealed the view of Li Keqiang, the prime minister, then a provincial party secretary. He had said, with a smile, that gdp figures were “for reference only”: he relied instead on proxies, such as electricity use.

Like their leaders, citizens in dictatorships often assume they are being lied to. Outsiders should be similarly sceptical.■

Chart sources: “How much should we trust the dictator’s GDP growth estimates?”, by L.R. Martinez, 2022; Freedom House; World Bank

I posted a piece on the dodgy data for Chinese growth here: Just how big is China.  

Click to see clearer chart, or visit original article.

Just how big is China?

Everybody who works with Chinese data eventually starts suspecting that GDP is smaller than the official statistics say.  

The video below makes a compelling case that China's GDP may be only 40% of its official size, while also explaining just how China calculates its GDP, and how parlous local government and provincial finances are, and also why it is always a construction boom that is used to stimulate growth out of recession.  By the way, it also hints at why China's municipalities and provinces keep on building unneeded coal power stations.

US monthly GDP proxy starts to fall

 My US QCI (a monthly GDP proxy; QCI  stands for "Quick Coinciding Index".  Yeah, I know --- as if there isn't already enough jargon in economics!)  has started to fall.  As you can see, in the chart below, it is very well correlated with GDP, though it is more volatile.  Data through December for the QCI; through QIII  for GDP.  

Remember, economies are like tankers; even if you turn off the engines it takes a tanker 8 kilometres and 20 minutes to come to a stop.  Economies respond with a long, and variable, lag to rising interest rates.  This time a year ago, the Fed Funds rate was zero.  Now it's 4.3%.  Expect further declines in the US economy.  In March last year, the QCI was rising at an annualised rate of 13% per month; now it's falling by an annualised rate of 1%, which appears to be accelerating.  What's the bet that by June, the Fed will have stopped raising rates?  But they'll prolly wait too long to cut rates.  Alas.

More on the Russian economy.

 What an exciting title for this piece!

The chart below shows my Russian coinciding index, designed to track the economic cycle, and real GDP, expressed as a percentage of their moving trend.   As you can see, it's an excellent fit.  And, no, GDP isn't one of the components of my coinciding index, because it's quarterly.  There is an official monthly GDP, but I haven't used it as I don't have data going back far enough.

 

Improving my China alternate GDP index

I mentioned in my last piece that I needed more services compnents in my alternate China GDP  index.  I've decided to add the number of passenger-kilometres travelled to the index.

This is a chart of passenger-km seasonally adjusted.  Note the sharp plunge in 2003 with the SARS virus, analogous to the new SARS virus now.  Fortunately, SARS is much less infectious than COVID-19, so the downturn was confined to China.  Now it is global, so the economic damage will be much worse.

The new calculation of alternate GDP, which includes civil aviation passenger-kilometres, is a better fit to GDP  than the old one.  It now has two service indicators included in its calculation—the volume of retail sales and air travel.  It also tracks published GDP more closely for the last few years than the old index did.

I first introduced my alternate GDP index here.

China's GDP falls 9.8% in Q1

My estimate using my monthly alternative GDP calculation underestimated the decline in Q1 GDP in China.  In fact GDP declined by 9.8% in Q1.  And no, that's not an annualised rate.  Because this decline was caused by the coronavirus, it affected services more than manufacturing, which is unusual in an economic downturn.  And my alternative GDP estimate has no services component, mainly because there are few services indicators in China.  It does however include the volume of retail sales, but if there existed more indices of services, I might include them.

The first chart shows the official estimate of GDP vs my alternative GDP.  The second chart show my estimate of quarterly GDP derived using the Chow-Lin technique on my monthly alternative GDP calculation, plus annual data prior to the period I start my estimates.  This is quite clearly the worst downturn China has experienced, apart from the catastrophes of the "Great Leap Forwards" and the "Cultural Revolution".

China GDP down 4% in Q1

China has released some data for January and February this year, showing very sharp declines in several macro-economic time series as a result of the virus lockdown.  E.g. car sales down 80% year-on-year, industrial production down 13.5% yoy, the volume of retail sales down 14.3%.  My alternative GDP calculation points towards 'genuine' GDP, as opposed to the official GDP data, being down by at least 4% in Q1 2020.  Even though production has restarted in China as the number of infections declines, it's only just crunching now in the rest of the world, so recovery of demand is likely to be sluggish.  It could take until Q3 or later for growth to return to normal.

I introduced my alternative calculation for China's GDP here.

US econ slumps

The various regional branches of the US Federal Reserve Bank (the Fed) do surveys of business conditions in their region.  If you add 5 of them together (unweighted) you get an indicator which closely follows the year on year change in real GDP,  but leads it by 3-5 months.  We now have data for January.  This is perfectly consistent with my longer-leading index which points to an at best slowdown in 2019 and 2020 and at worst recession.  Of which more anon.

Moral of the story: economic growth in the US, as measured by real GDP,  is about to plunge.  Which is prolly why the Fed has backed away from further rate increases, and is muttering about slowing the unwinding of QE.

Unemployment and growth in the US

The chart shows the year-on-year percentage change in real (inflation-adjusted) US GDP compared with the 6 month change in the unemployment rate, inverted.  So, if the unemployment rate was 6% 6 months ago and is 4% now, that would show as +2%.  Why inverted?  Because when growth improves, unemployment falls; when the economy goes into recession, unemployment rises.  Unemployment is inversely related to the business cycle.

The relationship between these two indicators prior to 2011 is very good.  Since 2011, there is still a relationship but the red line (the change in unemployment, inverted) is higher relative to GDP than it used to be.  Which means unemployment has fallen faster in this recovery than you might have expected.   Put another way round, lower economic growth this cycle has nevertheless led to a bigger than normal fall in unemployment. Which in turn implies that productivity growth has been lower than it was historically.  Following from that, it suggests that the US long-term sustainable growth is lower, because sustainable growth equals long-term productivity growth multiplied by the growth in the labour force.

Why has productivity growth been lower this cycle?  Partly because experienced baby-boomers have been retiring and have been replaced by youngsters.  Partly because company investment in plant and equipment has been lower than in the past.  Soaring profits have been used to buy back shares, not to invest in new capacity.  Whatever the reason, it ought to be concerning the US government.  If there were any grownups left, that is.

(Click to enlarge)

The Lucky Country

Take a look at the relative growth rates of Australia, New Zealand, the US, UK and Europe in the chart. Starting in Q1/2004 at 100, Australia is nearly at 155 (and that was before today's scorching 1.2 % Q-on-Q growth estimate for Q2/2010) much higher than any of the other countries or regions shown.

Why?

Partly luck. China continues to boom, and we're selling them raw materials. China is now the world's largest consumer of commodities. And despite a Chinese "slowdown" (we should be so lucky), prices and volumes just keep going up.

Partly good management. Unlike the Fed, the RBA took away the liquor before the party got too wild. They started raising interest rates early on before the 2002-2007 boom got out of hand, whereas the Fed kept rates too low allowing an unsustainable housing bubble to swell. When it duly burst everybody was covered with gunk.

Partly immigration. Massive immigration, some of it allegedly temporary (students here to study in a cheap but definitely not nasty English-speaking country) helped push up demand for housing, demand for everything. Our unemployment rate is just 5%.

There's talk of an Ozzie housing bubble. Meself, I doubt it. Unless... they slash immigration and remove negative gearing.

BTW, did you observe the good performance of New Zealand in all this? And they don't produce any commodities. Beaut country though. Maybe it's all the tourism.