The Independent Australia ranking on economic management (IAREM) for 2024 offers insights ahead of national elections, as Alan Austin reports.
NORWAY HAS the world’s best economy for the second year in a row with its lead expanding dramatically. Australia has accelerated its surge up the global rankings, jumping from 13th place to seventh. The USA remains in the top 20, with strong income per person and growth in gross domestic product (GDP).
All three nations face imminent elections, in which economic performance may well be deciding factors.
World’s top ten economies
In order, the best-performed economies in 2024, with IAREM scores achieved, were:
- Norway, 32.32;
- Denmark, 23.75;
- United Arab Emirates, 23.48;
- Hong Kong, 22.47;
- Switzerland, 19.14;
- Oman, 18.12;
- Australia, 17.42;
- South Korea, 14.94;
- Singapore, 14.75; and
- Iceland, 14.59.
Norway, Denmark, the UAE, Switzerland, Singapore and Iceland were all in the top ten in 2023. Hong Kong rose from 12th last year to fifth on strong GDP growth and employment. Oman is up ten places with high employment, budget surpluses and low inflation. South Korea jumped three places with improved outcomes across the board.
The next ten, in order, were:
- Taiwan, 13.91;
- Malta, 13.47;
- Cyprus, 11.78;
- Luxembourg, 11.42;
- Canada, 9.86;
- New Zealand, 8.45;
- Slovenia, 7.31;
- Netherlands, 5.95;
- United States, 4.49; and
- Ireland, 4.44.
The low scores towards the bottom of the table indicate this is an era of unusually low GDP growth, high government debt and more budget deficits than surpluses.
The IAREM score
The Independent Australia ranking on economic management is a composite index which measures the world’s major economies on eight indicators. These are national income per person; GDP growth; median wealth per adult; jobs; inflation; tax levels; budget balances; and government borrowings.
This transparent formula can easily be replicated with basic spreadsheet software:
IAREM = ip + gr + mw + j – in – t – bb + gb.
Data comes from tables published by the International Monetary Fund (IMF), the World Bank, Swiss bank UBS and Trading Economics. This is the world’s only index of overall economic performance using multiple variables.
The formula was amended this year following the decision not to use information from the Heritage Foundation in the USA, and access to enhanced data from the IMF via its Fiscal Monitor and World Economic Outlook.
Norwegian ascendancy
Norway is unique among advanced economies in that most of the profits from its vast energy exports are retained rather than shifted offshore by foreign corporations. Income from Norway’s North Sea oil and gas fields goes into a sovereign wealth fund which finances much of the nation’s social welfare and infrastructure investment.
Norway’s ascendancy on the IAREM this year is due primarily to its excellent budget surplus, net savings, income per person and low unemployment.
Under Prime Minister Jonas Gahr Støre’s Labour Government, Norway has also achieved record export volumes, a reduction in household debt, low inequality and ninth ranking in the world on both median and mean average wealth in the 2024 UBS Wealth Report.
Norway, like Australia, switches to Labour governments regularly and always sees strong economic improvement when they do.
The jobless rate was 4.5% when Jens Stoltenberg’s Labour Party took office in October 2005. A year later it was 3.3% and then 2.4% after two years. That pattern was repeated in 2021 and 2022. See chart below.
Norway’s media generally report economic and political developments accurately and fairly. In its latest update, Reporters Without Borders ranked Norway first in the world in its press freedom index.
This bodes well for Prime Minister Støre’s re-election next September.
Australia’s rise accelerates
Australia has climbed from 22nd on the IAREM in 2022 to 13th last year and now to seventh. This is due to jobs growth, wealth per adult, budget surpluses, reduced debt and higher GDP growth than most other countries.
This reverses the steady decline through the nine Coalition years, from third in 2014 to 13th in 2016, to 21st in 2018, to 28th in 2019, then finishing 23rd in 2021.
Unlike Norway, virtually all Australia’s mainstream newsrooms refuse to report the deterioration in published outcomes during Coalition periods and conversely fail to report the steady improvement under Labor.
Hence this success is unlikely to have electoral impact.
The USA in an election year
The U.S. economy finished in 19th place, down just one rung from 18th last year. While outcomes on jobs and GDP growth were exceptionally good, America’s economy lags much of the developed world on budget deficits and government debt.
Like Australia, the USA is recovering from years of mismanagement and corruption under the previous regime. The USA tumbled from ranking in the top ten during the late Obama period to 29th in 2018 and 34th in 2019 under Trump.
If voters credit the current administration with this turnaround, then this should favour Kamala Harris and the Democrats in next Tuesday’s presidential and congressional elections.
Other winners and losers
Successful economies over the last year, besides all those in the top ten, include Taiwan (up 12 places to 11th), Malta (up 14 to 12th), Sweden (up 21 places to 23rd) and Britain (up 19 to 27th).
Economies which struggled were Singapore (down six places to ninth), Luxembourg (down seven to 14th), Ireland (down 12 rungs to 20th) and Israel (unsurprisingly, down 13 places to 25th).
War is bad for the economic wellbeing of citizens. So are governments which make ill-advised decisions in times of peace.
Alan Austin is an Independent Australia columnist and freelance journalist. You can follow him on Twitter @alanaustin001.
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Australia License
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