The compounding effects of the COVID-19 pandemic, lockdowns in China, supply-chain disruptions, and the Russian invasion of Ukraine are the major causes of the current economic depression. With the growing inflation across the world, the global economy could be entering a period of stagflation which could have harmful consequences, notably elevated inflation and slow economic for middle and low-income countries.
Top Countries Fairing Well in the Current Economic Depression. Do They Use Crypto?
According to the World Bank’s latest Global Economic Prospects report, the global economy is at high risk of stagflation, with the worldwide growth expected to plummet from 5.7% in 2021 to 2.9% in 2022— significantly lower than the anticipated 4.1% in January. Global economic growth is expected to hover around 2.9%, with economies still struggling to recover from the effects of the pandemic along with the ongoing Ukraine invasion, which has disrupted economic growth in different measures.
There are different indicators of a country’s economic performance, including stock market performance, gross domestic performance (GDP), household incomes, government indebtedness, and capital spending. The different performance indicators are averaged, creating an overall score. Here are the top 5 countries with economies performing well despite the current economic depression and their stance on cryptocurrency.
South Korea has recently been among the best performing economies thanks to its highly developed mixed economy. By 2021, the country has witnessed 4.0% GDP growth thanks to growing export. The country’s economic growth has been fueled by high industrialization led by different sectors, including automobile production, telecommunications, chemical, shipbuilding, and steel manufacturing.
South Korea’s economy is projected to grow by 2.5% in 2023 amidst the current economic depression experienced across the globe. The country’s economic growth also comprises private consumption and construction investment, which expanded by 1.7% and 2.9%, respectively.
Stance on Crypto
South Korea is largely pro-crypto, with the country legalizing crypto ownership and trading on 5th March 2020. The Korean crypto market grew by 55.2 trillion ($45.9 billion) by the end of 2021, with active crypto users reaching nearly 5.58 million or around 10% of the country’s population.
South Korea’s new president Yoon Suk-yeol promised to implement crypto-friendly policies after winning the presidency in May 2022. The president pledged to raise crypto investment gains to 50 million won and make the sector more transparent by aligning it with FATF’s anti-money laundering policies. Cryptocurrency use has been a pivotal contributor to the country’s economic development, with millennials reeling from the growth of crypto assets in recent times.
UAE’s economy has faired pretty well in the current economic depression. According to the United Arab Emirates central bank, the country’s real gross domestic product (GDP) growth jumped to 3.8% in 2021, with experts predicting it will hit 5.4% in 2022, with non-oil GDP growth rising to 5.4% in 2021.
The economy of the United Arab Emirates is currently the strongest in the Gulf, with oil rent in Abu Dhabi, tourism in Dubai, and transportation and real estate being the largest contributors to the GDP. The country recorded an impressive 6% economic growth in the half-year of 2022, thanks to the recovery of the tourism sector, rising oil production, and development in the real estate sector.
UAE has been at the forefront of promoting cryptocurrency and blockchain technology. Nearly 67% of UAE residents have invested in cryptocurrencies, with the Government permitting some crypto exchanges to operate in the free-zone economic zone. Besides, the country doesn’t impose any capital gains or personal income taxes, making it a suitable ground for cryptocurrency investors. The UAE is banking on cryptocurrency and blockchain technology to grow its economy in the coming years.
Ireland’s economy seems to have recovered strongly following the COVID-19 pandemic and has even shown immense growth. The country’s gross domestic product expanded by 10.8% in the first quarter of 2022, accelerating from a 9.6% growth in the fourth quarter of 2022, making it one of the strongest performing economies seen anywhere on the globe. The economic growth has chiefly been driven by growth in international exports, IT growth, and a buoyant pharmaceutical industry.
Ireland has a friendly cryptocurrency environment, ranking 6th among crypto-ready countries worldwide. The country is home to numerous Bitcoin ATMs, with the Irish Government keen to support the development and adoption of new cryptocurrency technologies, including Blockchain.
The Irish Government recently launched the “International Financial Services Strategy 2025” (IFS2025)-a roadmap to develop Ireland as the global leader in the financial services sector and make the country a centre of excellence for distributed ledger technology (DLT).
The Norwegian economy bounced back strongly after the pandemic and is currently the best performing economy in Europe despite the current economic depression. The economy grew by 4.8% in the first quarter of 2022. The mainland economic growth accelerated to 5.8% year on year in Q1, up from the prior quarter’s 5.2% growth on the backdrop of a growing export of goods and services as well as crude oil and natural gas.
Stance on Cryptocurrency
Norway is the world’s leading cashless country and is pretty welcoming to crypto use. The country’s parliament rejected a proposal to burn Bitcoin owing to the booming Bitcoin and crypto interest.
Bitcoin is currently the most used digital currency in the country, accounting for two-thirds of all Norwegian crypto investors’ holdings, followed by Ethereum in second place. Over 420, 000 Norwegians own cryptocurrencies translating to 10% of the country’s adult population. This is an increase of 120,000 people (7%) since 2021.
Norway is yet to implement legislation or regulatory frameworks to regulate cryptocurrency or blockchain technologies. The country treats cryptocurrency the same way as any investment, meaning that cryptos are taxed. Changes in the value of virtual currency holdings owned by an individual or enterprise are taxable as capital income upon realization. Gains are taxable income, while losses are tax-deductible for the individual/enterprise.
Despite the current economic depression, Saudi Arabia’s economy grew by an impressive 9.9% in the first quarter of 2022, recording the highest growth rate in the last 10 years. The economic growth in the country is mainly driven by growth in oil activities. The war in Ukraine has created supply issues as the EU moved to sanction Russian oil and gas imports, threatening global energy supplies. The World Bank predicts that the country’s economy will grow by 7.7% in 2022, driven by higher oil revenue and growing non-oil GDP.
Saudi Arabia is open to cryptocurrencies despite the country’s lack of clear legislation and regulatory frameworks to govern cryptocurrency use. While Bitcoin is legal in the country with no restrictions on individuals spending or purchasing it, the government prohibits banks from dealing in cryptocurrency. Nonetheless, the country is keen on implementing blockchain technology across its borders to harness the benefits of the technology.
Final Thoughts- Cryptocurrency and Economic Growth
While there isn’t any direct link between using cryptocurrencies and economic growth, countries faring well in the current economic depression have a soft stance toward cryptos. Cryptocurrencies have largely been touted as the panacea for economic growth thanks to their vast benefits, including facilitating seamless cross-border payments and providing new technologies to enhance business growth.
While cryptocurrencies can accelerate the economic and social development of a country, some nations that have legalized them aren’t experiencing similar economic growth. For instance, despite El Salvador making Bitcoin a legal tender, its economic growth is still relatively low. As such, it’s correct to state that other factors determine economic prosperity other than being crypto-pro. Other countries that have burned cryptocurrency use, such as China, are still doing well economically despite being anti-crypto. To wrap it up, numerous factors determine a country’s economic growth and not just being open to crypto use.