In this article I’m going to share with you a list of the smallest economies in the world: countries with GDP under 1 billion US dollars. These nations have such a little impact on world economy that they wouldn’t be even a blip compared to the largest economies. They may be interesting places to live if you’d like to live far away from everything and be a part of a very small local economy.
But before I share these countries, here’s a very brief primer on GDP, purchasing power parity, and GDP per capita.
A Quick Word About Gross Domestic Product (GDP) and Purchasing Power Parity
Economic growth and production is most commonly calculated by GDP (gross domestic product) based on purchasing power parity (PPP). PPP is calculated with a basket of goods for more accurate comparisons between countries (while nominal GDP uses exchange rates).
The world’s largest economy according to this measure is China. World Bank estimates the country’s GDP based on purchasing power parity at 30 trillion US dollars in 2022. The US comes second, with the country’s economy recording GDP at 25 trillion US dollars.
Then we also have GDP (PPP) per capita. It’s one of the indicators of a country’s standard of living and we calculate it by dividing GDP based on purchasing power parity by the country’s population. For China, according to World Bank, GDP per capita (PPP) is $19,338 in 2021. For the US, that number is $69,288, indicating a much higher standard of living despite lower overall GDP.
But what about the smallest countries that don’t even make a dent in world GDP? Here they are, ranked from the ones with the highest GDP to the lowest one.
9 Countries With GDP Under 1 Billion
The following nine countries have the smallest contribution to global economy.
1. Dominica – 966 million USD
The Caribbean nation of Dominica where 72,000 people live is the strongest contender to pass the 1 billion mark soon. Its GDP per capita based on purchasing power parity is $11,974, making its standard of living higher than in countries such as Jamaica, Philippines, Morocco, India, Nicaragua, or Cambodia. Dominica’s biggest sources of income are agriculture (particularly bananas), financial services, and passport sales.
2. Vanuatu – 922 million USD
Vanuatu, an island country in the South Pacific, has about 308,000 inhabitants. Despite a much higher number of citizens than Dominica, the country produces much less, reaching GDP per capita of $3,105, one of the lowest in the world. Vanuatu’s economy is based on agriculture, tourism, financial services, and livestock.
3. Tonga – 666 million USD
Tonga is this ranking’s third largest economy. It’s a Polynesian country composed of 171 islands, with a population of 100,000. Its GDP per capita is $6,694, making its standard of living higher than in countries such as Pakistan, Kenya, or Nepal. Tonga’s economy is based on agriculture.
4. The Federated States of Micronesia – 386 million USD
The Federated States of Micronesia is a country in the western Pacific that consists of about 607 islands. 105,000 people call it home. It has a very low GDP per capita of $3,544, making it one of the poorest nations in the world. The country relies on subsistence farming and fishing.
5. Kiribati – 268 million USD
Kiribati is a country in the central Pacific Ocean with a population of 119,000. Its GDP per capita is $2,172, making it the country with the lowest standard of living in this ranking. Similar to the Federated States of Micronesia, Kiribati has a subsistence economy with very little foreign investment and natural resources.
6. Marshall Islands – 245 million USD
Marshall Islands are located in the western Pacific Ocean. The country has 62,000 inhabitants. Its GDP per capita is $4,182. The economy is mostly based on agriculture and fishing, with a big part of the country’s budget coming from direct US aid.
7. Palau – 236 million USD
Palau is another western Pacific country. With only 18,000 inhabitants it’s one of the least populous countries in the world. Its GDP per capita is $16,319 which is the highest in this ranking (and higher than countries such as South Africa, Sri Lanka, Egypt, or Indonesia). Palau’s economy relies on tourism, subsistence agriculture and fishing.
8. Nauru – 145 million USD
Nauru is situated in the central Pacific. With 11,000 citizens, it’s one of the top five least populous countries in the world. The country’s GDP per capita is $15,103. The economy of Nauru relied on phosphate mining until the reserves were exhausted in the late 2010s. Its current sources of income are the sale of fishing rights in the country’s territorial waters and revenue from an offshore Australian immigration detention facility.
9. Tuvalu – 63 million USD
Located about midway between Hawaii and Australia, Tuvalu is by far the tiniest economy in the world. It has a population of about 12,000 people. Its GDP per capita is $5,082. The country’s economy relies on agriculture and fishing.
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