If 2016 was the year of political shocks, this year could be when we find how they’ll impact the global economy. Bloomberg’s Misery Index, which combines countries’ 2017 inflation and unemployment outlooks, aims to show us 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 U.K., Poland and Mexico, to name a few.
Economic woes have plagued Venezuela for years. Sluggish 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. Economists estimate that prices will rise almost six-fold this year, according to the median estimate in a Bloomberg survey.
A turn for the worse
Moving closer to Venezuela territory — though 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 in the rankings, 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. Though it’s 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’ Misery Index rankings.
The misery also has deepened in Mexico, according to the index. After finishing 2016 at No. 38, it’s slated to rise to 31st place as inflation balloons to a forecast of 5 percent in 2017 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 dollar since the U.S. presidential election in November is pressuring prices.
The U.K.’s move by two notches toward more misery comes on the heels of the Brexit vote. The popular referendum that cemented the start of the country’s move out of the European Union 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 U.K. since 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 oil spending slipping in 2017 while unemployment holds at around 4.8 percent — the latter perhaps a credit to the government’s spending spree.
Peru also is poised to impress with a noteworthy 13-position move toward a happier economy this year. Again, this is good news for bad reasons: Peru was more miserable than expected in 2016 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.
Rounding out the most-improved in the rankings this year should be Hong Kong, Taiwan, 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. The U.S. remained among the 20 least miserable countries (at No. 49), though now a few spots worse than China, with which it tied in 2016.
For full rankings, please see the table. Bloomberg’s misery index comprises 65 countries and is calculated by adding together the forecasts for a country’s rate of inflation and unemployment. A higher score indicates more ‘misery.’