Inflation is a disease that can wreck a society, Milton Friedman, the late Nobel laureate economist, once said.
Add rising unemployment to that disease and his profession ascribes a rather nontechnical term to the debilitating effect on people – misery.
This year, that affliction will be most acute in Venezuela, Argentina, South Africa, Ukraine and Greece – the five most painful economies in which to live and work, according to the Bloomberg survey data that make up the misery index for 2015.
It’s a simple equation: unemployment rate plus change in the consumer price index equals misery.
In Ukraine’s case, war will exact greater economic casualties. Tension with Russia-backed rebels will prolong joblessness in the Eastern European nation, and inflation won’t offer much relief, the surveys shows.
The one-two punch means Ukrainian consumers will be the fourth-saddest among 51 economies (including the eurozone area), according to forecasts based on the measure.
Adding to the agony is the relatively abysmal income growth that will fail to cushion Ukrainian households against the still-surging prices. At $8 494 gross domestic product (GDP) per capita this year, Ukraine only edges out the Philippines among the countries surveyed and measured by the International Monetary Fund’s proxy for resident income.
Unemployment will probably climb to 9.5% in Ukraine this year from its 8.9% rate as of the third quarter in 2014, the survey data shows. Inflation is projected to rise at a 17.5% in 2015, compared with the 24.9% December year-on-year rate.
The depressing expectations for Ukraine still aren’t as bad as what the embattled nation faced in 2014, when it finished second in the misery index.
The 2015 projections, dismal as they are, makes Ukraine overtake South Africa and Argentina from last year’s misery-index readings.
The three countries that will probably see the most economic misery in 2015 – South Africa, Argentina and Venezuela – haven’t budged much from their 2014 rankings, when they occupied three of the top four spots, the data shows.
At 78.5%, the estimated consumer price index inflation rate in most-miserable Venezuela more than quadruples Ukraine’s inflation rate. The dire shortage of basic goods in Venezuela last week prompted neighbouring Trinidad and Tobago to offer a tissue paper-for-oil swap.
Five years after investors popularised the term PIIGS to describe a handful of European countries with bloated budget deficits, four of those five countries remain in dire straits, according to their projected misery indexes.
Greece is fifth, Spain is sixth, Portugal is 10th and Italy is 11th in this year’s ranking, though each show about average projected income levels relative to survey peers. Ireland happily sits further down the chain at number 16 in the misery ranking, with a much better than average GDP per capita of $48 787.
The average GDP per capita of the 51 economies in the misery index was $31 079. – Bloomberg