Argentina was once again in the top 10 of the “Misery Index”, despite the measurement change in its favor.

Argentina is once again among the 10 countries with the greatest economic hardship or “misery” among 157 countries calculated by economist Steve Hanke, a professor at Johns Hopkins University in Baltimore, USA, a hawk of hard money and the economy Was. Conservative woman who recently told Infobae she supports Javier Miley’s proposal to dollarize Argentina’s economy to end inflation.

Hanke this Thursday published a new edition of his Hanke Annual Misery Index (HAMI) based on 2022 data from The National Review, an American publication. Argentina once again appears in sixth place in the ranking, following Zimbabwe, Venezuela, Syria, Lebanon and Sudan and ahead of Yemen, Ukraine and Cuba. The country almost claims the first spot in that ranking: apart from 2021, it was ranked first in the 2020 and 2019 editions as well.

With a rating of just over 156 points, the country fared worse than the previous year by 86 points, a difference that is largely explained by the increase in inflation and interest rates between 2021 and 2022. The most “miserable” countries in this edition, Zimbabwe and Venezuela, recorded scores of 414.7 and 330.8 respectively. Brazil, which came ninth in the previous edition, moved away from the top 10 this time and moved up to the 27th position with a score of 61 points.

At the opposite extreme, at the bottom of the ranking (ergo, better in Hanke’s metric), with scores between 5 and just 11 points, the 10 luckiest countries or jurisdictions are Switzerland, Kuwait, Ireland, Japan, Malaysia, Taiwan, Niger Were. , Thailand, Togo and the Principality of Malta.

not necessarily “sad”

It should be clarified that the word misery in English refers more to a state of misfortune, trouble or sometimes hardship than to misery or extreme poverty. The index is also very economical, as it does not directly include data such as poverty rates, nutrition, education, insecurity or war conditions, which make life miserable for affected countries and people.

The index considers inflation, unemployment, and nominal interest rates as “bad” factors and subtracts, as it is a “good” factor, corresponding year-end GDP growth per capita.

The original Economic Distress Index was the brainchild of economist Arthur Okun, later refined by Harvard professor Robert Barro, with variables such as the yield on a country’s 30-year bond and the “gap” of real GDP relative to “potential”. were involved. Hanke complemented Baro’s contribution by replacing the GDP “gap” calculation with the real (i.e., inflation-adjusted) growth rate of GDP per capita and the yield on 30-year bonds (which many countries cannot issue) by “active” interest. simplified. The rate that banks apply to their loans to households and companies.

The novelty is that for the first time, in response to criticism from Josh Zumbrun, a Wall Street Journal columnist who insisted that similar rates of inflation and unemployment do not have the same depressing effect, Hanke decided to double the price. Unemployment by computing the index, which is thus now derived from adding the inflation rate, the interest rate, and doubling the unemployment rate and subtracting the per capita GDP growth rate. The first 3 variables contribute to “misery” or hardship, while per capita GDP growth attenuates it or contributes to people’s well-being or happiness.

cushion inflation factor

In this way, Hanke partially mitigated the heavy weight he assigned to inflation. But, as Infobay pointed out at the time, it also tends to count more than once: first directly and then indirectly, due to its effect on the “nominality” of the interest rate, something that in real terms It happens even when it happens. is negative (ie less than inflation).

The methodological shift favors Argentina, which has a low unemployment rate, partly because it does not include a population that is not looking for a job because they have little chance of finding it, which is accompanied by very low productivity and income. work informally, and for recipients of social schemes.

Nevertheless, Argentina was once again among the 10 most “miserable” countries in 2022, as “nominal” inflation continues to have a high incidence and because the country has very high inflation. The rise in prices in recent months and the recent rise in interest rates (up to 97% for deposit rates) will cause the country to rise in the Hanke ranking.

It also happens that inflation and interest rates (as well as exchange rates) tend to be higher and more volatile (especially in unstable economies) than unemployment and GDP per capita variance due to their financial-type characteristics, which tend to slow down. Slowly changing and it is less common they should be in double digits.

weight factor

Inflation is considered a main “contributing factor” in 31 cases, both directly and indirectly, through interest rates, in 44 of the 157 countries included in the index (and in 8 of the 10 most “miserable” countries). 81 The main factor in the outcome is the unemployment rate (in some cases, because of its positive effect, being low, as in the US, in others because it is high, as in Italy and Spain).

(low unemployment rate) is a “main contributing factor” to the low “misery index” of 6 out of 10 countries that were luckiest in 2022 according to Hanke’s ranking, although it is doubtful that residents of countries like Togo and Niger would be ranked as the world’s luckiest. Considered the least miserable or most fortunate of. For only one country was the real rate of GDP growth per capita the main factor in the result, in this case very favourable: Ireland, which ascends the podium, behind Switzerland and Kuwait, one of the 3 luckiest countries in the world. In form of.

The index rates Argentina as more unhappy than Ukraine, a country at war, invaded and bombed by Russia, and Sudan, also at war. Another paradox is that despite high inflation that pushed Turkey to tenth place in the 2022 Misery Index, President Recep Tayyip Erdogan won the first round of the presidential election and is likely to win again in Sunday’s runoff. 28. Erdogan was mayor of Istanbul between 1994 and 1998, prime minister between 2003 and 2014 and has been presiding over his country since last year, consolidated after a failed coup. Turkey also faced a devastating earthquake earlier this year that killed more than 55,000 people.

The most important aspect of the Turkish regime’s economic policy is the decision to keep interest rates very low, despite the lira’s rapid devaluation and high inflation. This measure, of course, prevents him from getting a poor rating in Hanke’s “Misery Index”, which led Menem to propose a “conservative convertibility” model in the 90s and eventually a model of dollarization, for which he now supports Miley’s proposal.

Sergio Sericchio