If last year was the year of political shocks, this could be the year when their impact on the global economy materializes. Bloomberg’s Misery Index — which combines countries’ inflation and unemployment outlooks for this year — aims to reveal just that.
For the third year in a row, Venezuela’s economic and political problems make it the most miserable in the ranking. The least miserable country is once again Thailand — in large part due to its unique way of calculating employment — and the rest of the ladder features noteworthy moves by the UK, Poland and Mexico, to name a few.
Economic woes have plagued Venezuela for years. Sluggish crude oil prices, the country’s only significant export, have fueled a crisis that has left grocery store shelves empty, hospitals without basic medication and violent crime rampant as desperation leads to anger.
While the country has not reported economic data since 2015, Bloomberg’s Cafe Con Leche Index, which aims to track inflation via the cost of a cup of coffee, shows a price surge of 1,419 percent since mid-August of that year.
Economists estimate that prices would rise almost six-fold this year, according to the median estimate in a Bloomberg survey.
Moving closer to Venezuela’s territory — although no country even comes close to its score of nearly 500 — are a handful of central and eastern European countries.
Poland, which experienced the biggest negative move, clocks in at No. 28 among this year’s 65 economies, from a rank of 45 in last year’s index of actual performance. The higher the ranking, the more miserable the economy.
Although it has seen a steady decline in its unemployment rate since the financial crisis, inflation rose to 1.8 percent in January after Poland’s longest period of deflation on record. Similar price increases in Romania, Estonia, Latvia and Slovakia drove large jumps in the countries’ rankings.
The misery has also deepened in Mexico, according to the index.
After finishing last year at No. 38, it is slated to rise to 31st place as inflation balloons to a forecast of 5 percent this year from an average 2.8 percent last year. A combination of the end of government fuel subsidies and the peso’s 11 percent decline against the US dollar since the US presidential election in November last year is pressuring prices.
The UK’s move by two notches toward more misery comes on the heels of the Brexit vote, which has driven the pound to a more than 30-year low, pushing up the cost of imports and, along with it, inflation. Price growth has been sluggish in the UK since crude oil prices fell at the end of 2014.
Making strides to become less miserable is a diverse cast of characters: Norway, Peru and even China.
Norway’s economic woes could at least lower prices for consumers this year, allowing the country some room to improve on last year’s mediocre performance and become less miserable by 18 spots. Economists see crude oil spending slipping this year while unemployment holds at about 4.8 percent — the latter perhaps a credit to the government’s spending spree.
Peru is also poised to impress with a noteworthy 13-position move toward a happier economy. Again, this is good news for bad reasons: Peru was more miserable than expected last year as a drought sparked food-price inflation and weak domestic demand weighed on the labor market. Economists appear to agree with Peru’s central bank, which sees improvement in investment and trade on the horizon.
Other most-improved nations in the rankings this year are Taiwan, Hong Kong, the Netherlands, China, Ecuador and Russia — each set to move down nine spots or more.
A rosier outlook in China, the world’s second-biggest economy, is a boon for global prospects.
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