Ivan Kroshnyi: Robert bot
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Best and Worst Performance Figures Demonstrated by Countries This Year

The Economist has collected data on five economic and financial figures, namely GDP, inflation, inflation breadth, stock market dynamics, and government debt in terms of 34 rich countries. After rating each one depending on how well it performed, the overall rating has been compiled. And we’ve got some really unexpected findings.

Notably, Greece is at the top of the list. Other countries, such as Portugal and Spain, that plumbed the economic depths in the early 2010s also performed well. Despite the political turmoil, Israel showed excellent results as well. While having political stability, Germany was among the countries that fell behind. The two Baltic countries, Estonia and Latvia, which received praise for implementing quick reforms in the 2010s, are at the bottom of the list.

1. GDP. Norway boosted by high oil prices and Turkey thanks to sanctions trade with Russia demonstrated the best results. It seems that Ireland had a pretty solid year too but still not quite as strong (the operation of multinational companies, many of which are registered there to pay taxes, distorts the numbers). The GDP of the United States is quite misleading as statisticians have a hard time factoring in the impact of massive stimulus packages.

2. Change in prices since late 2021. Some countries that are away from the public eye have a fairly low inflation rate. In Switzerland, consumer prices increased by +3% only. Thanks to a strong currency, the Central Bank responded quickly to the prices spiking at the beginning of the year. Countries with energy sources that are not tied to Russia, such as Spain, whose main gas supplier is Algeria, also performed better than average. The other countries which depend heavily on the Russian Federation really struggled. For instance, average consumer prices in Latvia rose by 20%.

3. The share of goods in the inflation basket of each country has increased in price by over 2% in the span of the year. This alone gives us an idea of how deeply ingrained inflation is and also hints at how quickly it will decline in 2023. Some countries with high core inflation managed to limit its extent. The consumer prices in Italy have increased by 11% this year, but only 2/3 of the country’s basket demonstrates inflation above the target levels. The United Kingdom is not doing all too well as the prices for all categories in its basket are going up rapidly.

4. The value of retirement savings and stock portfolios. Some countries had a really rough year when it comes to this type of investment. Over the course of the year, the stock market in Germany fell by 10%, by 11% in Sweden, and by 22% in South Korea. That being said, there are also strong examples. In the course of the year, the stock market in Norway grew by 1.6%, along with the stock market of the United Kingdom which has shown a 1.26% increase. 

5. Changes in net government debt as a share of GDP. From a short-term perspective, governments can cover up cracks in the economy by increasing spending or reducing taxes. This may, however, result in increased levels of debt and prompt the need to tighten the fiscal screws in the future. Some governments are spending a lot of money to address the drop in the cost of living. Germany has allocated 7% of its GDP to cover electricity costs, which means an increase in the debt-to-GDP ratio. Other countries opted out as far as budget spending goes and that partially helped to rectify the situation

Will the 2022 gap between winners and losers remain the same in 2023? Burdened by rapidly aging populations and high debts, the economic growth in southern Europe will undoubtedly lessen. The high inflation in the United States and the United Kingdom may finally come down which may in turn help these countries go up in rating. Meanwhile, differences will remain in terms of other parameters. This applies in particular to the countries which depend on energy supplies. 2023 will be a much tougher year now that supplies have been mostly stopped. This will be another matter of concern for the Baltic countries, but not as much as for the other end of Europe.

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