Venezuela just notched an important milestone in the brief history of the Bloomberg Misery Index: For the fourth year in a row, the Latin American socialist paradise was ranked the world’s “most miserable” economy, with a score on the misery index that’s more than three times as large as its score from 2017.
But this year, the rest of the countries atop the list of the most miserable will more closely resemble Venezuela as rising prices surpass unemployment as the greatest contributor to global misery, according to Bloomberg.
Shifts in ranking among the most miserable countries are illustrated in the chart below:
Perhaps the most notable move is South Africa. Cape Town, one of the country’s largest cities, is facing such a severe water shortage due to a severe drought that the city could essentially run out of water in less than 100 days. Meanwhile, the country’s ruling party finally forced out its deeply unpopular leader, former President Jacob Zuma, but disillusionment with the ANC, the country’s ruling party since the end of apartheid, continues to simmer.
Meanwhile, Thailand again claimed the “least miserable” spot, though the Thailand’s unique way of calculating unemployment (and the fact that the country’s fishing industry is facing international pressure over slave-like working conditions) makes No. 2 Singapore worth mentioning as an important also-ran. Mexico is becoming less miserable as an inflationary spiral driven by a weakening currency has largely subsided. Romania, meanwhile, is moving in the wrong direction on the miserable list as its economy struggles with rising inflation.
Overall, economists with the International Monetary Fund expect the global economy to expand by 3.7% year-on-year, while the world in 2018, matching last year’s pace that was the best since 2011.
In Venezuela, hyperinflation has left many economists throwing up their hands at the actual rate of price growth. Black-market currency rates have provided an angle on the numbers, while alternative measures have chased daily cost swings. A recent government slashing of grocery prices gave a brief reprieve to inflation, while the surveyed economists see it rising 1,864 percent this year.
Venezuela and Romania are examples of two countries that are heading in the wrong direction…
Some have not been so fortunate. In Venezuela, hyperinflation has left many economists throwing up their hands at the actual rate of price growth. Black-market currency rates have provided an angle on the numbers, while alternative measures have chased daily cost swings. A recent government slashing of grocery prices gave a brief reprieve to inflation, while the surveyed economists see it rising 1,864 percent this year.
It’s anyone’s guess: The International Monetary Fund’s latest estimate has that figure at 13,000 percent for this year after about 2,400 percent in 2017.
Romania also is heading in the wrong direction. Economists see a 3.3 percent inflation rate for 2018 after much more subdued price growth last year, pushing its misery down 16 notches, to No. 34. The National Bank of Romania is chasing inflation with interest-rate hikes, aiming to stay ahead of any overheating while growth surges on ballooning government spending.
…While Mexico’s dramatic improvement is also worth noting.
At the other end of the spectrum, Mexico makes the biggest progress this year, moving 16 notches toward “least miserable” as economists remain optimistic that the central bank will be able to tame last year’s bout of high inflation, bringing it to an average 4.1 percent this year after 6 percent in 2017. Unemployment is set to remain around 3.4 percent.
Two caveats here: Mexico’s jobless figures don’t take into account the 60 percent or so of workers who are in the informal economy. And despite this year’s improvement, consumer confidence remains in a funk and Nafta negotiations might not see a happy ending.
Here are some other notable factoids, courtesy of Bloomberg:
- Malaysia moves down the misery scale to No. 52 from No. 43 due to moderating inflation. The tepid price growth is allowing Bank Negara Malaysia to be patient with interest-rate hikes, even as they were first in the region this year to tighten this year
- Argentina, ranked at No. 3, belies a third year of improvement in its overall score, set to be the lowest since at least 2013, the year in which the IMF censured the country for covering up high inflation and when Bloomberg began calculating the data
- South Korea and Norway, which also happened to perform well in the Bloomberg 2018 Innovation Index at Nos. 1 and 15, broke into the top-10 least miserable
- Saudi Arabia, projected to make the biggest plunge from 2017 in its misery index number, climbs into the top 10 most-miserable economies
- The U.S. will see its misery score improve to 6.2 this year from 6.5 in 2017 even as inflation rises following years of persistently low price gains, and as the labor market continues to tighten
- China, the world’s second-largest economy, saw its misery score rise to 6.3 this year from 5.5 in 2017. Consumer prices are estimated to rise 2.3 percent this year, compared with 1.6 percent in 2017
- Asian economies are fortunate to escape the top 10 most miserable this year, which are otherwise geographically diverse with Europe, Latin America, and Africa almost equally represented.