What will be the most miserable economies in 2018?
As Steve Hanke put it, the human condition inhibits a vast continuum between “happy” and “miserable.” When it comes to economics, misery tends to stem from high inflation and high unemployment. The best way to ensure happiness is to grow economically, but that is not easy with high inflation and unemployment.
The vast majority of countries report on economic indicators on a regular basis. Therefore, we can compare each nation to get an idea of how happy or miserable the people are in each of the nations.
Are you curious how happy or miserable your country is? In this post we attempt to give you an idea of which countries will be the most miserable (or happy) next year by using our projections for inflation and unemployment in 2018 for 126 countries to calculate their misery index score.
Click on the image to view a larger version
What is the misery index?
The misery index is an economic indicator originally created by Arthur Okun, a former Brookings Institution economist and member of the Council of Economic Advisers to U.S. President Lyndon B. Johnson. The misery index is calculated by simply adding the unemployment rate to the inflation rate. Despite its rather simple calculation, it is useful in determining how the average citizen in a given country is doing, as higher rates of unemployment and inflation are associated with increased socioeconomic issues for a country.
Okun invented the misery index in the 1970s while working at the Brookings Institution. The misery index is often trotted out during times of economic turmoil and Okun’s invention was certainly timed to perfection in that regard. During the 1970s, the U.S. as well as much of the rest of the world was suffering from both high inflation and high unemployment, which came to be called “stag-flation”. This was largely caused by OPEC’s rise to power and subsequent oil shipment boycott to the U.S. and other western nations in retaliation for their assistance to Israel during the Yom Kippur War. This situation caused oil prices to skyrocket and economic growth to slow while the stock market crashed.
Although the misery index usually appears in times of economic turmoil, the global economy is doing pretty well at the moment. We forecast global growth at 3.2% in 2018, which would represent the highest growth in many years. However, we’ve brought out the misery index anyway to see which economies will be moving toward misery and happiness in 2018.
2018 Misery Index
Thailand will once again be at the bottom of the list due in large part to their rather unorthodox way of counting employment as well as their low fertility rate and aging population. Remember, contrary to most lists, the misery index is a list where economies want to be as far from the top as possible.
And speaking of the top, any way you slice it, Venezuela is going to be the most miserable economy in 2018. With inflation projected to come in close to 2000% in 2018, their unemployment level is largely irrelevant for our calculations of their misery. Venezuela’s economic woes have plagued them for years now with sluggish oil prices having played a large part in the country’s demise, as crude oil is the country’s only significant export. Venezuela’s situation doesn’t look like it will be changing any time soon, as macroeconomic imbalances, unorthodox policies, surging inflation and a lack of investment are expected to keep Venezuela in a severe economic crisis for the foreseeable future.
Although no country comes anywhere near Venezuela’s score on the misery index scale, DR Congo and Yemen come in as the second and third most miserable countries in 2018, both countries having shot up into the top 3 from 22nd and 18th respectively in 2016.
In the DR Congo, inflation remains at multi-year highs and although export earnings are set to increase, GDP growth will remain subdued and economic conditions challenging. The Central Bank warned that if the government decides to ease ongoing austerity measures and loosen monetary conditions, this could cause the Congolese franc to depreciate further, leading inflation to shoot up and increasing economic hardships in the population as a result. Despite the DR Congo staying in the top 3 in 2018, the country can take solace in the fact that their misery index score is projected to come down 8 points from 2017.
In war torn Yemen the situation is spiraling out of control. The economy has been torn to shreds by the civil war, which has caused agricultural and hydrocarbon production to screech to a halt and fiscal revenues to plummet, while a cholera epidemic threatens to spread rapidly. Despite how it sounds, our projections are still favorable to Yemen for next year, as we project 4.0% growth in 2018 and 10.1% in 2019, but this all depends on the outcome of the civil war. Similar to the DR Congo, Yemen’s misery index score is projected to come down in 2018 and 2019.
Egypt and Argentina will also see similar notable drops in the index despite staying in the top 10. In Argentina monetary authorities continue to attempt to coral the stubbornly high inflation rate, however, with little success. Nonetheless, it is projected to come down to under 20% in 2018 for the first time in 5 years. Egypt has suffered from high inflation for the last year and change due to a variety of factors including the government's decision to float the pound in November 2016 to end a foreign exchange shortage, which was crippling business activity as well as government subsidy cuts for fuel and electricity last summer. However, inflation is beginning to decrease as the effects from the summer’s reforms subside along with tight monetary conditions, which are expected to stay in place for the foreseeable future. The unemployment rate has also fallen substantially over the last 12 months, which is expected to continue. Both economies are moving in the right direction, with Argentina projected to be out of the top 10 come 2019.
Misery Index 2018: Moves in the middle
In the middle of the list there will be a number of notable moves downward in 2018. Starting with Ukraine, the economy is currently floundering likely still feeling the repercussions of severed trade ties with the rebel-held Donbass region. But, inflation is seen coming down next year along with unemployment, as the economy improves as effects from the blockade fade.
Heading west, the Iberian connection, Spain and Portugal, will both see substantial moves down the misery index list. In Spain, the labor market is improving markedly as is the economy as a whole, while in Portugal it is the same story. Unemployment fell to a 9-year low in Q3 of 2017 in both economies and is expected to continue in a downward trajectory in 2018.
Kazakhstan, where inflation is the main contributing factor to the country’s misery score, is making a move down the table as well, with inflation expected to fall to below 7% in 2018. Inflation was more than double that in 2016.
In Mexico, although the inflation rate rose significantly during 2017 due to a weak peso and a government increase of gas and diesel prices, the inflation rate is looking like it will decrease significantly from 2017, to move the country down over 15 spots on the list.
The Russian economy, which is seeing a resurgence since 2016, is making moves toward a happier economy. Inflation has fallen to multi-year lows of late and unemployment is projected to fall in 2018 as well. Russia has fallen on the list from 43rd in 2016 to a projected 78th in 2018.
Another one of the BRIC countries, Brazil is also moving down the list in 2018 from where it was in 2016. The economy looks like it turned a corner in mid-2017 after a few years of less than stellar economic performances. Historically low inflation is likely to play a part in fueling an acceleration in growth in 2018. While the economy is finally growing after the worst recession in its modern history, many challenges lie ahead, and severe macroeconomic imbalances still need to be addressed.
Ireland’s economy has become the mecca for U.S. tech companies and has seen its economy improve massively as a result over the years. Nevertheless, it is due for a massive fall toward happiness in 2018 from 2016. Unemployment is currently at multi-year lows and is projected to fall substantially in 2018.
Other notable moves toward happier economies include Malaysia, where the economy is expected to continue growing robustly next year and inflation to fall and Norway, where the economy is expected to be supported by falling unemployment and rising wages next year.
Rounding out the economies with the most improvement toward happiness in 2018 is Azerbaijan, Belarus, Belgium, Ghana, Kenya, Peru, Paraguay, the Netherlands, Lithuania, Latvia and lastly, Angola, which will be making its way out of the top 10 by 2019. The United States and China are still in the top 25 least miserable countries, at 22nd and 23rd respectively.
The case of Brunei
An interesting case toward the bottom of the list is Brunei, which has experienced negative inflation in recent years, but is projected to be 0% in 2018. Unemployment is expected to drop drastically in 2018, which reflects the tremendous progress they have made recently in the labor sector. In early November, the World Bank named Brunei “the most improved country” in its annual Doing Business report. The country jumped 16 places from last year’s rankings. The report noted reform efforts to create a more business-friendly environment. These reforms included making credit more accessible, protecting minority investors and reducing barriers to starting a business. Brunei will be moving down the list over 25 places to be the second happiest economy in 2018 according to our projections.
Click on image to view larger version
What about the countries making moves in the wrong direction?
In contrast to some of their regional partners such as Angola, Ghana and Kenya, the two African giants, South Africa and Nigeria, are moving in the opposite direction. South Africa is moving up into the top 5 most miserable economies in 2018 and will be number 2 on the list by 2019, with an unemployment rate above 25% and seen rising. Nigeria, although moving up the list of most miserable economies, is actually projected to see its index decrease in 2018. Unemployment is still projected to stay at high levels in 2018, but inflation is projected to come down gradually over the coming quarters as the economy looks to have turned a corner in mid-2017.
Another notable economy moving in the wrong direction is Romania. Rather surprisingly, Romania is projected to move fairly high up the list in 2018 and 2019. Romania has been the star of eastern Europe in recent years, and the economy is on track to grow at the fastest pace since 2008 this year. However, a number of issues including rising inflation are presenting risks to economic growth in 2018. Inflation is projected to increase substantially next year, causing Romania’s rise up the list toward misery.
You can see the entire list below. If you’d like to get more historical data, Consensus Forecasts, charts, graphs and written analysis from our team of economists, download a free sample report by clicking on the button below the table.
|2018 Rank||Country||2018 Misery Index|
|2016 Misery Index|
|89||Trinidad and Tobago||7.9||7.0||91|
5-year economic forecasts on 30+ economic indicators for 127 countries & 33 commodities.
Date: December 22, 2017
TagsPrecious Metals Commodities Italy Fed Brazil Spain Germany Mexico South Africa Portugal precious metals Venezuela Inflation Nordic Economies Canada Energy Commodities European Union Panelists Russia Banking Sector United Kingdom Africa Australia oil prices Company News France Greece G7 Gold Emerging Markets OPEC Industrial Metals Commodities Housing Market Tunisia Iran MENA Infographic Economic Growth (GDP) UK Latin America China Unemployment rate Brexit Colombia Euro Area Exchange Rate Japan Forex Investment Ukraine Turkey Commodities Argentina Oil Base Metals Commodities Major Economies Consensus Forecast Eastern Europe NAFTA Trade India Asia Sub-Saharan Africa IMF Agricultural Commodities USA Latin America Euro Area NAFTA Vietnam
11 minutes ago
1 hour ago
Analysts Russia’s election having limited economic implications this year https://t.co/UbnLH3Ijir
17 hours ago
18 hours ago
Weaker investment dynamics are causing economic growth to slow in Israel: https://t.co/NqG81idLwy
19 hours ago
- Increasing poverty in Latin America takes a breather thanks to improving economic dynamics
- What will be the most miserable economies in 2018?
- The World's Top 10 Largest Economies
- Is Spain doing enough to address its high youth unemployment rate?
- Has Latin America gone far enough in reducing barriers to international trade?
- Commodities Outlook: Oil, Natural Gas, Coal, Lead & Tin
- 21 experts tell us what the future looks like for cryptocurrencies and blockchain
- Turkish lira plummets to all-time low on Erdogan’s monetary feud and tense U.S.-Turkey relations
- Copper: The first metal mastered by man
- Nigerian Economy Still Treading Water Thanks to Oil Sector
- The Mercosur-EU Free Trade Agreement: Obstacles & Opportunities
- Elections in Chile: What the results could mean for the economy
- QE’s Untold Story: A Chart That Fed Correspondents Need To Investigate
- Holland’s fragile one-seat majority government targets economic growth at the expense of fiscal sustainability
- South Africa: Economy at a tipping point?
- Latin American Commodities: What’s behind the increase in demand and prices?
- Is the UK really "shackled to a corpse"?
- Spain-Catalonia: 7 economic experts weigh in on how the situation will affect the outlook
- How well is Spain's labor market doing since the crisis?
- Which countries will have the highest and lowest inflation in 2017?
- How vulnerable is Latin America to economic crises today?
- Iron ore facts and common questions answered
- The bulging economic costs of obesity
- How much investment is needed to salvage Latin America’s crumbling infrastructure?
- A Look at the Potential Impact of Brexit on the Dutch Economy
- Emerging Markets Are Kicking Into Higher Gear In 2017
- Why is foreign direct investment in Latin America falling again?
- Are Central Banks Nationalising the Economy?
- Bounty or burden? The impact of refugees on European economies is far from clear
- What’s the future of U.S.-Latin America trade relations?
- Taxes or cutbacks? Latin America's challenge of sustaining spending without causing debt to skyrocket
- Are uranium prices making a comeback?
- Taxing the Economy: Achieving a Delicate Balance
- How will Latin America’s upcoming lengthy election cycle affect the reform agenda and credit ratings?
- How will emerging market economies perform in 2017?
- Chilean Economy in Focus: Interview with Senior Economist of the Chamber of Commerce of Santiago
- CEOs Rank Top Economies for Growth Opportunities
- The Mobile Ecosystem & Latin America's Economy
- Prospects and Challenges for the Global Economy: Interview with Tim Cooper from BMI Research
- How will the Fed reduce its balance sheet & and how will the ECB end QE? - 19 economic experts weigh in
- Thoughts on "unwinding" QE from Frances Coppola
- Gold: The Most Precious of Metals (Part 3)
- The Fed and ECB at a crossroads: Unwinding QE
- Spain: The economy that continues to silence the critics
- Latin America: The Most Unequal Region in the World
- The History of OPEC: Has it been a Success?
- FocusEconomics Announces 2017 Analyst Forecast Awards Winners
- Latin America’s rising unemployment bucks nearly decade long trend
- Escape from the Central Bank Trap by Daniel Lacalle
- China's economic rebalancing act: What to look out for in 2017
- Driving Growth in Latin America: Challenges & Priorities
- Is the Global Economy Rebalancing?
- Commodity exporters face challenging times
- Recent Global Events Facilitate Mercosur-Pacific Alliance
- 23 economic experts weigh in: Why is productivity growth so low?
- Mexico's outlook as Trump nears 100-day mark
- Interview with Oxford Economics Senior Economist on implications of the possible outcomes of the French Presidential Election
- The anxiety of the small saver in a world of negative interest rates
- Brexit negotiations. Between Uncertainty and Urgency
- An Economic History of the EU from El Blog Salmón
- Baby Boomin': Implications of high population growth in Latin America
- Survey of International Economists Predicts a Le Pen Defeat in French Elections, Says Macron has Best Economic Plan
- Spain in a global context: developed economy with some challenges
- How much is crime costing Latin America?
- Predictions & Estimates from Economist Daniel Lacalle
- What economy will the new Dutch government inherit?
- “The data is not a true reflection of reality in India” Interview with Société Générale India Economist
- 2017 & 2018 Economic Outlook for the Top Oil Producing Countries
- What are the prospects for Emerging Economies in 2017?
- What to expect in Asia for 2017
- Top Economics & Finance Blogs of 2017
- Latam to Resume Moderate Growth in 2017 but Important Risks Plague Outlook
- 4 Key European Elections That Will Impact the Economy in 2017
- How are security concerns and political chaos affecting Turkey’s economy?
- Global growth to edge up in 2017
- Set to breach targets again? Debt and deficit outlooks for Southern European Eurozone countries in 2016 & 2017
- What does Donald Trump mean for the U.S. economy?
- How will emerging markets perform in 2017?
- The economic impact of a break in U.S.-Philippines ties
- Trump election: Base metals surge due to infrastructure plan
- 5 updates on the Venezuelan economic crisis
- Canada: When your neighbor’s house is on fire…
- Short-term pain before long-term gain? A look at French labor reform and economic growth
- Asia: Unremarkable growth & unfulfilled promises?
- How India's latest monsoon is affecting the economy
- Innovation in Latin America: Potential Goes Untapped Due to Weak Economic Conditions
- Russian economy update in wake of OPEC deal announcement
- The Wisdom of the Crowds and the Consensus Forecast
- Can the peso predict the U.S. election results?
- There's no end in sight to the Venezuela crisis
- A Look at the European Union Political Calendar
- Survey of international economists shows uncertainty surrounding elections damaging U.S. growth prospects
- FocusEconomics partners with leading online statistics provider Statista
- China: Recent postive economic data may be papering over the cracks
- Sub-Saharan Africa's 2016 & 2017 growth rates
- The Italian Dilemma: Weak banks pose risk to already faltering domestic demand
- How much money do migrants from Latin America send home?
- The U.S.' (Not So) Mysterious Case of the Missing Men
- What to expect from the G20 economies by 2020
- The Pain in Spain: Robust GDP growth cannot mask the persistent structural deficit