Although the year that is ending has been, in general, downright bad for the economies of most Western countries, there are some that, within the disaster, have managed to save face. After analyzing the evolution of five economic indicators in 34 countries, The Economist has prepared a ranking around the economic behavior that they have experienced. The results offer some surprises: on the podium are Greece, Portular and Ireland. Spain is in fourth position, tied with Israel.
The economic year has been marked by very high annual inflation and losses in the stock markets, according to The Economist. In any case, some countries have been more defeated than others.
To assess the different behavior of countries, The Economist has compiled data on five economic and financial indicators: GDP, inflation, amplitude of inflation, stock market performance and, finally, public debt. And it has done so in 34 countries that, in most cases, fall into the category of rich or developed.
The Economist notes that “for the first time in a long time” an “economic party” is taking place in the Mediterranean. Not surprisingly, the first on the list is Greece. “Other countries that plumbed the economic depths in the early 2010s, including Portugal and Spain, also rank high,” she says. Israel is also in a privileged position, "despite the political chaos."
In any case, The Economist mentions that in these countries the end of the restrictions on tourism has been especially perceived. In other words, taking into account that what has been measured is the evolution and not the general situation, the countries that suffered a great economic blow during the pandemic due to the restrictions on tourism, have strengthened with the return of strength to this sector.
At the opposite pole, the evolution has been negative in the case of Germany, “despite its political stability”. In addition, two Baltic countries, Estonia and Latvia, which strengthened in the 2010s, are among the worst positioned based on their evolution this year.
On the GDP side, Norway, helped by high oil prices, and Turkey, helped by a boom in anti-sanctions trade with Russia, have fared better than most.
Ireland appears in the leading positions, especially due to the evolution of the GDP. However, The Economist notes that the activities of large multinational companies (registered there for tax purposes) may have distorted the figures.
By contrast, US GDP numbers are deceptively weak in recent quarters, according to The Economist, as statistics have struggled to account for the impact of huge stimulus packages.
As for inflation, there are large differences. Consumer prices in Switzerland have risen by only 3%. The Economist also mentions Spain in this section, which "has been less resentful than most for depending to a lesser extent on Russia in energy matters."
“Countries that depend on Vladimir Putin for fuel have suffered. In Latvia, average consumer prices have risen by a fifth more than their previous price, ”he collects.
In order to calculate the extent of inflation, The Economist has taken as a reference those items in which prices have risen by more than 2% in the last year. “This provides a measure of where it has risen, and therefore tells you how fast inflation will fall over the next year,” he says. Thus, he glimpses a prompt improvement in inflation in Italy, and a less encouraging outlook in the United Kingdom.
As regards the feeling of economic well-being, attention has been paid to the value of pension funds and stock portfolios, among other elements. “Both Germany and South Korea have fallen by almost a fifth in 2022, twice the drop in the United States,” reports The Economist.
Finally, the study looks at the variation in net public debt as a share of GDP. “In the short term, ministers can hide economic cracks by increasing spending or cutting taxes. However, this may create more debt and therefore the need to tighten the fiscal screws in the future. Some governments have spent exorbitant amounts to cope with the contraction in the cost of living. Germany has allocated funds worth around 7% of GDP to help with skyrocketing energy costs, meaning its debt-to-GDP ratio has risen. Other countries have pulled back from the splurge, helping to mend the fiscal ship. Public debt in southern European countries seems to be on the decline”, the article states.
As for the near-term outlook, The Economist indicates that in a short time economic growth in southern Europe, weighed down by rapidly aging populations and high debt, will surely fall back to “regionally usual levels”.
It also indicates that "there are hopeful signs that in countries like the United States and the United Kingdom high inflation may ease."
Elsewhere, The Economist explains that these disparate developments are likely to persist, "particularly when it comes to those countries that depend on Mr. Putin for their energy." “Against all odds, many managed to replenish their natural gas reserves before winter set in, but only at outrageous prices. With supplies now largely cut off, next year will be much more difficult. That will be a great concern in the Baltic countries, but less on the other side of Europe, ”he says.
