Australia’s is almost certainly the worst collapse of any economy through the last six years of global economic recovery. IA’s econometrics specialist Alan Austin reveals the winners and losers for 2019.
FOR SEVERAL YEARS, Singapore’s government has focused on sharing the wealth of the small Asian commercial dynamo with the lowest income earners. The rewards of this strategy have been many — and not just for Singapore’s poor.
Singapore’s economy was the best-performed in the world on the Independent Australia ranking of economic management (IAREM) for 2019. This is a rise from second place last year and a return to the pinnacle it achieved in 2014 and 2017.
World’s top ten
This year’s IAREM leading economies, with last year’s score in brackets, are:
- Singapore 33.82 (38.72)
- Brunei 30.83 (34.86)
- Hong Kong 30.09 (37.62)
- Norway 29.27 (27.47)
- Ireland 28.41 (28.73)
- Switzerland 28.34 (31.42)
- Malta 27.86 (22.72)
- Luxembourg 26.13 (28.57)
- United Arab Emirates 25.13 (25.63)
- Taiwan 25.06 (23.21)
The IAREM score*
The Independent Australia ranking on economic management is a composite index which measures the performance of all national economies on eight key indicators.
These are national income per person, growth in gross domestic product (GDP), median wealth per adult, jobs, inflation, tax levels, government debt and economic freedom. This simple formula can easily be replicated by anyone with spreadsheet software and an interest in facts and figures:
IAREM = ip + gr + mw + j – in – t – gd + ef
The raw data comes from publicly accessible tables issued by the World Bank, Credit Suisse, Heritage Foundation, the CIA and tradingeconomics.com. This is the world’s only index of overall economic performance based on multiple variables.
Solid performers in 2019
The second tier after the top ten is as follows:
11. New Zealand 23.91 (22.37)
12. Iceland 23.72 (39.32)
13. Korea, South 23.60 (24.53)
14. Canada 23.12 (21.93)
15. Kuwait 23.09 (22.80)
16. Germany 22.46 (22.19)
17. Netherlands 21.98 (23.70)
18. Bahrain 21.88 (18.52)
19. The Czech Republic 21.71 (19.51)
20. Denmark 20.46 (14.36)
The third group comprises of:
21. Vietnam 20.40 (20.40)
22. Sweden 19.85 (20.39)
23. Estonia 19.55 (19.73)
24. Cambodia 19.48 (14.71)
25. China 19.35 (21.36)
26. Panama 18.69 (23.36)
27. Belarus 18.38 (14.36)
28. Australia 18.33 (20.97)
29. Lithuania 18.02 (17.76)
30. Bulgaria 17.93 (13.73)
Winners are grinners
Singapore is a surprise winner to some extent as its annual GDP growth has been declining steadily, falling to just 0.1% for the last two quarters. Compensating for that, however, is sound employment, with the jobless rate at or below 2.3% for the last ten years and strong outcomes on income, wealth and economic freedom.
Several European economies took advantage of the current global boom in trade and commerce and climbed through the ranks this year, mostly with more jobs, expanding wealth and decreased government debt. Malta rose eight places, Bulgaria 11, Slovenia and Belarus both 12 and Denmark an impressive 19 places – up from 39th to 20th. Denmark’s jobless rate is down to 3.7%, its annual GDP growth has lifted to a solid 2.6% and the debt is steadily reducing.
Elsewhere, New Zealand improved five places, Bahrain nine and Cambodia 12. All these have caught the current global tailwinds and created jobs, expanded wealth, reduced debt and kept GDP growth positive.
The United Kingdom, despite the Brexit turmoil, rose from 41st to 32nd but remains well behind the leaders.
The sorry losers
The USA fell five places from a lowly 29th last year to 34th now. That’s down from tenth in 2014. Last week, U.S. Federal debt reached a milestone not announced by the White House. Three trillion dollars has been added to the debt since Donald Trump’s inauguration. Any day now it will break $23 trillion. The U.S. economy has enjoyed buoyant jobs and incomes, but GDP growth has slowed.
China fell six places from 19th to 25th, partly on lower GDP growth and more debt. But China and the US mainly lost ground because other countries snuck ahead.
Iceland fell from top place last year to an ignominious 12th, with corrections to income, GDP growth and the jobless. Iceland’s median wealth fell nearly $US15, 000 to just $166,000 per adult.
Other losers included the Netherlands down six places, Panama down 14, Thailand down 18 and, of course, Australia which has now plunged for six years straight.
Australia fell six places this year to a lowly 28th. This continues the relentless decline since the Coalition took charge of the economy in 2013. Australia deteriorated badly this year on wealth per adult, as discussed here, and on GDP growth. It fell marginally on unemployment and just stayed level on the other measures.
Australia’s is almost certainly the worst collapse of any economy through the last six years of global economic recovery.
Australia’s IAREM rankings for the last 13 years are:
2007: 9th (Coalition)
2008: 3rd (Labor)
2009: 1st (Labor)
2010: 4th (Labor)
2011: 1st (Labor)
2012: 1st (Labor)
2013: 1st (Labor)
2014: 3rd (Coalition)
2015: 9th (Coalition)
2016: 13th (Coalition)
2017: 18th (Coalition)
2018: 21st (Coalition)
2019: 28th (Coalition)
*IAREM Top 30 Economies 2019
1. IAREM calculations are detailed in the 2013 edition. The same caveats apply. See also analyses for 2007, 2014, 2015, 2016, 2017 and 2018.
2. This year, a couple of factors have lowered some scores from previous years, notably for the leaders. Generally, GDP growth and inflation have been lower at the top of this scale.
The methodology was changed slightly this year for calculating government debt. The same World Bank database and the same calculations were used again, but outer limits of +8.00 and -8.00 were applied. This recognises that government borrowings today are not perceived as negatively as was the case some years ago when the IAREM was developed. This has no significant effect on the rankings.
3. The author and publisher welcome interaction. Readers are urged to join the discussion below and at the IAREM Facebook page. Further data will be readily supplied.
You can follow Alan Austin on Twitter @AlanAustin001.
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