What is the best performing economy in the world this year?

Almost everyone predicted a global recession in 2023, as central bankers battled high inflation. They were wrong. Global GDP may have grown by 3%. Labor markets have held up. Inflation is on the way down. Stock markets are up 20%.

But this overall performance hides a wide discrepancy, and on December 18, 2023, the British magazine “The Economist” collected data on 5 economic and financial indicators: (inflation, widening inflation, gross domestic product, jobs, and stock market performance), for 35 countries, most of them rich.

Addressing high prices

At the top of the list, for the second year in a row, is Greece, a remarkable result for an economy that until recently was synonymous with mismanagement. In second place is South Korea. The United States comes in third. Canada and Chile are not far behind. At the same time, there are plenty of Zombies in northern Europe, including Britain, Germany, Sweden and Finland are at the rear.

Tackling high prices was the biggest challenge in 2023, and the first measure looks at “core” inflation, which excludes volatile components such as energy and food, and is therefore a good indicator of underlying inflationary pressures. Japan and South Korea maintained prices, and in Switzerland, core prices rose by only 1.3% year-on-year. But elsewhere in Europe, many countries are still facing serious pressures. In Hungary, core inflation is around 11% year-on-year, and Finland is also suffering from inflation.

Growth in employment and domestic product

Central banks in places like Chile and South Korea cut interest rates in 2022, at a time when many other rich countries in the world were reaping the benefits of the decline.

Growth in employment and domestic product also measure the extent to which the economy is able to meet the needs of ordinary people. Nowhere has done spectacularly well in 2023, but a little less than that has been seen in a decline in GDP in Ireland, which has fared the worst, with a growth rate of 4.1% and there are major problems with Irish domestic revenues, as was the case in Britain and Germany are also bad. Germany faces a price shock in light of increasing competition with Chinese cars, there are still major floods with the consequences of Brexit.

GDP and employment

America has performed well in terms of GDP and employment, and has benefited from record-high energy production, as well as the effects of generous fiscal stimulus implemented in 2020 and 2021. Employment in Canada has been rising smartly.

You might think that the US stock market, full of companies ready to take advantage of the AI revolution, would have done well. But in reality, given inflation it has shown an average performance. The Australian stock market, full of commodity companies that managed to pull back from high prices in 2022, has performed poorly. Stock prices in Finland also fell. In contrast, Japanese companies are experiencing something of a renaissance. The country's stock market is one of the best performing markets this year, rising in real terms by about 20%.

Good stock returns

Good Stock Returns Thousands of miles west of Greece, where the real value of the stock market has risen more than 40%, investors have looked again at Greek companies as the government implements a series of market-supportive reforms.

Although the country remains much poorer than it was before the great collapse of early 2010, the International Monetary Fund, once Greece's enemy, praised in a recent statement the “digital transformation of the economy” and “increasing market competition.

The Economist ranked the 35 economies according to how well they fared on measures (inflation, inflation breadth, GDP, jobs, and stock market performance), creating an overall score for each. The table below shows the world rankings and some surprising results.