This report examines 50 years of data for in-depth insights.
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Reserves and their growth can be a very informative indicator of many aspects of a country's economic health. This report analyzes the countries whose reserves grew the fastest, i.e., had the fastest growth rate, and which countries have the highest level of reserves, including gold and foreign currency.
Data from the International Monetary Fund (IMF) and World Bank has been used in this analysis. Long term analysis of a country's reserves, and their year-on-year (YoY) growth can be used as an important indicator in making international investment decisions and analyzing a country, or regions future productive potential.
Countries with the highest level of reserves:
1. China – $3.2 Trillion
2. Japan – $1.32 Trillion
3. Euro Area – $0.914 Trillion
4. Switzerland – $0.855 Trillion
5. Russian Federation – $0.552 Trillion
6. United States – $0.517 Trillion
7. Saudi Arabia – $0.515 Trillion
8. India – $0.416 Trillion
9. Hong Kong SAR, China – $0.441
10. Korea – $0.408 Trillion
11. Brazil – $0.36 Trillion
12. Singapore – $0.285 Trillion
13. Thailand – $0.224 Trillion
14. Germany – $0.2243 Trillion
15. France – $0.189 Trillion
16. Mexico – $0.184 Trillion
17. Italy – $0.175 Trillion
18. United Kingdom – $0.173 Trillion
19. Czech Republic – $0.15 Trillion
20. Indonesia – $0.129 Trillion
Global reserves by country (all countries included):
Another important issue here is the YoY growth of reserves, which can provide substantially more information about the countries with the highest reserves
Year over year (YoY, yearly) growth in reserves (growth rate) of the top 10 highest reserves holding nations:
1. China – 20.3%
2. Japan – 14.8%
3. Euro Area – 5.04%
4. Switzerland – 12.31%
5. Russian Federation – 23%
6. United States – 7.6%
7. Saudi Arabia – 24%
8. India – 14%
9. Hong Kong SAR, China – 7.4%
10. Korea – 21%
As per the data, Russia, Saudi Arabia, Korea, and China have had the fastest growth rate amongst the highest reserve holding countries.
The reserves' growth of Saudi Arabia and Russia, of course, is attributed to the exploitation of natural resources; organic growth, as per improvements in productive outputs, in the top 10 economies is most visible in Korea, China, Japan, and Switzerland.
Russian and Saudi Arabian growth in reserves has relied on the exploitation of natural resources. Thus, Russia and Saudi Arabia's reserves are likely to see a decline, as global reliance on crude oil and crude oil-derived products declines.
Multiple think tanks have forecasted a decline in demand for their primary export, crude oil, and petroleum products.
Russia, however, has a more diversified top exports portfolio, compared to Saudi Arabia, with 56.9% of its exports not being mineral fuels related (Link).
This means that Russia should fare better than Saudi Arabia, as the overwhelming majority of Saudi Arabia's exports are mineral fuel related (Link).
Long-term analysis, therefore, of the top 10 nations in this report reveals that prospects of the Korean, Chinese, and Swiss economies look positive. On the other hand, Saudi Arabia and Russia's reserves are likely to decline as crude oil and petroleum-related products' demand wanes, due to shifting energy generation trends and mass adoption of electric automobiles.
Top growth rates of reserves
The following countries have demonstrated exceptional long-term average growth rates (full sheet and data attached below)
1. Azerbaijan – 260%
2. Equatorial Guinea – 146%
3. Moldova – 131%
4. Liberia – 92%
5. Gabon – 75%
6. Congo 75%
7. Armenia 69%
8. Lao PDR 63%
9. Cameroon 42%
10. Cambodia 37%
In the above-mentioned nations, considering a number of variables such as comparative advantage, long-term stability and rate of human development, the long-term prospects of Armenia, Moldova, and Cambodia appear the strongest.
The report includes the reserves and their YoY growth rate of all countries in the world below (Source: World Bank & IMF):
Put another way, the reserves' analysis reveals that economic performance of Armenia, Cambodia and Moldova has been impressive. These countries stand out for further investigation into investment opportunities and assessment of returns.
Cambodia, particularly, stands out, due to its economic performance and fundementals of growth being strong.
Long-term growth rates and current reserves position can give insights into a country's economic position, as a strong economy that aids in higher exports leads to an increased inflow of foreign currencies, which overtime can accumulate, and increase a country's reserve growth and net position in this regard. This is a strong indicator, arguable, superior to those indicators that have less substance and leave room for interpretation – thus, creating subjectivity.
A declining trend in the reserve position can either indicate an increase in a country's international investment position (IIP) or international investments; however, some international investments such as government bonds as IOUs are considered part of the reserves.
Alternatively, a decline in reserves can also indicate fundamental weaknesses in the economy of the subject country; weaknesses can reveal that the local productivity is either uncompetitive compared to other international markets, or an external shock has led to a decline in local economic activity, or international demand. Nevertheless, international investors looking to invest in a specific region or country can use this report to assess the long-term YoY growth rates of specific regions or countries to gain insights into their past performance.
Evaluating and examining the fundamental causes of appreciation or decline in the net reserves, their YoY growth rate, and whether the growth or decline is likely to persist can significantly aid investment decision-making.
Keywords: how to quickly analyze countries economic performance and exports, countries international economic position, inflow of capital, highest inflow and outflows of foreign currency by country