World’s best economy in an age of COVID-19

All economies have been badly affected by the pandemic this year, but some have weathered the storm better than others. Alan Austin reports.

CONGRATULATIONS, Taiwan. Not only has this progressive Asian island of 23.8 million people been the stand-out success in responding to the coronavirus pandemic, but it also leads the world on economic outcomes.

This is the first year since Independent Australia has been ranking world economies that Taiwan has emerged as the leader. It has done so in style, with a clear lead on second-placed Switzerland, which had the world’s best economy in 2016 and has been among the leaders since. In third place is South Korea, reaching its highest ranking since this series began.

Taiwan

Taiwan recorded very shallow negative annual growth in gross domestic product (GDP) in the second quarter this year — just 0.58%. It then bounced back with a creditable 3.33% growth in the third quarter. Its jobless rate is currently an impressive 3.78%, its GDP per person is high, as is its economic freedom.

Taiwan is clearly the world champion on controlling the coronavirus with average daily new infections in single digits since April and zero deaths since early May.

Top ten economies

In order, the best-performed economies in 2020, with scores achieved, are:

Taiwan: 13.78
Switzerland: 11.63
South Korea: 10.62
Luxembourg: 10.07
Norway: 9.39
China: 8.49
Ireland: 7.98
Czech Republic: 6.88
Netherlands: 6.75
Hong Kong: 6.49

The other economies in the top 30 are shown in the table, below.

World’s top 30 economies 2020

The formula for determining this ranking uses national income per person, GDP growth, employment, inflation, tax levels, government debt and economic freedom. The raw data comes from the World Bank, Heritage Foundation, the CIA Factbook and tradingeconomics.com.

Winners and losers through the pandemic

Every major economy has been hit badly by the coronavirus this year. None has been spared its impact on incomes, economic growth, wealth and jobs. But clearly some governments have handled the challenges better than others.

Economies which have advanced through the rankings this year, besides the top three mentioned above, are China, the Czech Republic, the Netherlands, Denmark, Vietnam and Indonesia.

Major losers have been the United States, Sweden, Malta, Canada and the United Kingdom. Unsurprisingly, most of these have failed badly to control the pandemic.

Australia’s dismal demise

There was no doubt whatsoever which economy was world’s best during the last global recession. Australia was the clear leader through the Global Financial Crisis of 2008 to 2013.

World Bank chief economist, Justin Lin spoke for all independent observers back in 2009:

“Australia is the only developed country to avoid recession. It is a unique achievement.”

This year, Australia’s ranking is a lowly 19th, having tumbled down the global rankings on virtually all variables since the 2013 change of government. The jobless rate of 6.94% currently ranks 92nd globally. GDP annual growth is negative 6.3% and government debt has ballooned to 45.1% of GDP.

There is no excuse for this in 2020, given Australia’s extraordinary exports performance, record corporate profits and its relative success in controlling the pandemic.

The United States in an election year

Far from having the world’s best economy, as soon-to-be-ex-President Donald Trump has constantly tweeted, the U.S. now ranks a dismal 26th. The economy has been crushed not just by the mismanagement of the coronavirus; the downturn was evident long before that arrived. The critical decisions which have caused widespread hardship have been the tax cuts for the rich, the abandonment of established trade deals and the disastrous imposition of tariffs.

This is not the IAREM

First published in March 2014, the Independent Australia ranking on economic management – the IAREM – has been calculated annually showing via a transparent formula how all major world economies have ranked on the important variables.

Unfortunately, it is not possible this year to compile the tables which generate the IAREM. Several reasons for this. Credit Suisse has decided this year not to publish its Global Wealth Databook, the document which has provided data on wealth per adult for the entire world. This is a critical IAREM component.

Secondly, current increase in gross domestic product, the vital measure of economic growth, is not available for many countries. In normal times, we can assume that this year’s GDP growth will be close to last year’s. So we can safely use slightly dated data. That approach would not have been valid this year.

World’s best economy 2019: No, not the Coalition's Australia

Australia’s is almost certainly the worst collapse of any economy through the last six years of global economic recovery.

We can, however, readily rank those developed and developing countries which do give us up-to-date economic data. So whereas the IAREM ranks about 100 economies, this analysis has been made with a slightly smaller group and one less variable. We trust this is still instructive.

We shall resume the IAREM as soon as Credit Suisse publishes the wealth data, which they have advised Independent Australia is likely to be around mid-2021.

Footnotes:

Calculations for this analysis are very similar to those for the IAREM, as detailed in the 2013 edition and updated in 2017, but with the omission of median wealth per adult. The same caveats apply.
Government debt is now drawn from trading economics, as this has the most current data.
The author and publisher welcome interaction. Readers are invited to join the chat below and at the IAREM Facebook page. Further data will be readily supplied.

Alan Austin’s defamation matter is nearly over. You can read an update HERE and help out by contributing to the crowd-funding campaign HERE. Alan Austin is an Independent Australia columnist and freelance journalist. You can follow him on Twitter @AlanAustin001.