The Independent Australia Ranking on Economic Management (IAREM) for 2021 reveals Ireland leading the world and Australia still languishing outside the top 20, reports Alan Austin.
LET’S OPEN a fine Redbreast 12-year-old single pot whiskey in celebration. According to the IAREM, Ireland now has the world’s best-performed economy. Singapore, which won top spot in 2014 and 2017, is a close second with Luxembourg, winner in 2008 and 2010, third.
Ireland's economy: Well-structured and maturing nicely
Ireland’s success is due to effectively wrangling both the coronavirus pandemic and challenges associated with Brexit. Its economy, we might say, beat more storied competitors by surprising the judges with its depth and character, smooth complexity and exhilarating spiciness, concluding with a long, sweet finish.
Through the recent COVID-induced global downturn, Ireland was one of only four OECD members to avoid recession. The others were Chile, Iceland and Turkey. Of these, Ireland alone averted deep job losses.
Ireland reached the pinnacle primarily on economic growth, however, its increase in Gross Domestic Product (GDP) at an annual rate of 21.6% in this year’s second quarter was among global leaders. Since 2012, GDP has grown by a thumping 86.1%. That is the strongest of all major economies, including China.
Over that period GDP in the USA, New Zealand and South Korea grew by less than 30%. In Germany, the Netherlands, Denmark and Switzerland growth was below 10%.
Several poorly managed economies actually went backwards over this period, including Australia, whose GDP declined in U.S. dollars by 13.9% from 2012 to 2020.
World’s top ten economies
The best-performed economies in 2021, with scores achieved, were:
- Ireland: 32.94
- Singapore: 31.85
- Luxembourg: 31.26
- Switzerland: 28.33
- Hong Kong: 26.26
- Taiwan: 25.24
- New Zealand: 24.98
- Norway: 24.71
- Denmark: 22.79
- South Korea: 22.67
The top thirty are shown in the table, below, with all IAREM components itemised.
The IAREM score
The Independent Australia ranking on economic management is a composite index that measures all the world’s economies on eight key indicators.
These are the following: national income per person; GDP growth; median wealth per adult; jobs; inflation; tax levels; government debt; and economic freedom. This transparent formula can easily be replicated with basic spreadsheet software.
The raw data comes from publicly accessible tables issued by the World Bank, Credit Suisse, Heritage Foundation, the CIA, the International Monetary Fund (IMF) and tradingeconomics.com. This is the world’s only index of overall economic performance based on multiple variables.
Australia’s dismal demise
Australia’s appalling ranking – at 23rd – confirms the current Coalition Government is the worst at economic management in Australia’s post-war history.
The improvement in ranking from 28th two years ago to 23rd now is attributable to relatively stronger GDP growth and median wealth.
These are the results of continuing demand for exports, high commodity prices and the commendable management of the pandemic by the states. Variables that have deteriorated over the last two years are jobs, inflation, the tax burden and federal government debt.
Taming the Asian tigers
This series has noted the recent surge in rankings of several emerging Asian economies. This has stalled this year. Brunei tumbled from the second rank in 2019 – the last year we published the full IAREM analysis – down to 21st this year. Vietnam fell from 21st to 37th, Cambodia from 24th to 47th and Japan from among the top ten just a few years ago to a dismal 50th.
In contrast, Malaysia surged this year to eleventh, up from 39th in 2019. China improved from 25th two years ago to 20th.