The Independent Australia ranking on economic management (IAREM) for 2022 reveals Switzerland is now the world’s best-managed economy, with the USA languishing outside the top forty.
The global table published today by online journal of political and social analysis Independent Australia shows Switzerland first, Singapore a very close second, Ireland third and the United Arab Emirates fourth.
This year’s results reflect the capability of governments to take advantage of extraordinary growth conditions as the world recovers from the Covid pandemic. They confirm that nations with low populations, high economic freedom and a culture of ingenuity and enterprise are generating the best overall economic outcomes.
Switzerland’s winning score was achieved via its impressive employment rate, exceptionally low inflation, the world’s second-highest business freedom and sustained economic growth following a dip in 2020.
Swiss ingenuity and enterprise
In recent years, Switzerland has effectively translated research and development successes into commercial sales. It has also built on its historic status as an international banking hub to now lead the world in exporting gold, other precious metals, jewellery and rare stones.
Switzerland has taken great advantage of the recovery period following the pandemic to increase trade. Only twice before the pandemic have total monthly exports exceeded 20 billion Swiss francs (CHF). But since February 2021, exports have been above 20 billion francs (US$20.7 billion) every month, hitting a peak of CHF23.9 billion (US$24.8 billion) in February this year. See blue and green chart, above.
With a population of just 8.6 million, the same as Virginia, Switzerland has become the world’s second largest exporter of pharmaceuticals and a major supplier of medical equipment, organic chemicals and industrial machinery. It no longer sells just cuckoo clocks, chocolates and cheese. In fact, dairy products are no longer in the top thirty export categories by total value.
World’s top ten economies
In order, the best-performed economies in 2022, with IAREM scores achieved, were:
1. Switzerland 26.56
2. Singapore 25.59
3. Ireland 24.29
4. United Arab Emirates 21.73
5. Luxembourg 20.74
6. Taiwan 19.01
7. Norway 17.25
8. Denmark 17.22
9. Israel 17.14
10. South Korea 16.70
The next ten were Portugal, Saudi Arabia, Malaysia, Iceland, Panama, Guatemala, Germany, the Netherlands, Slovenia and Vietnam. Most of these advanced through exceptionally strong economic growth and buoyant demand for jobs.
The IAREM score
The Independent Australia ranking on economic management is a composite index which measures all the world’s economies on eight key indicators. These are national income per person, GDP growth, median wealth per adult, jobs, inflation, tax levels, government debt and economic freedom. This transparent formula can easily be replicated with basic spreadsheet software:
IAREM = ip + gr + mw + j – in – t – gd + ef
Data comes from publicly accessible tables published by the World Bank, Credit Suisse, Heritage Foundation, the CIA Factbook, the International Monetary Fund and tradingeconomics.com. This is the world’s only index of overall economic performance based on multiple variables.
America’s dismal decline
The USA has usually ranked between 10th and 20th in the world since the first IAREM table was compiled in 2007. The highest ranking was tenth in 2014 as the USA recovered strongly from the great recession of 2008. Other countries gradually overtook the US through that boom period, so ranking was a modest 23rd when the Obama period ended in 2016.
It has been downhill from there, however, as multiple disastrous decisions by the Trump administration – on trade, tariffs, tax revenue, spending and federal debt – took their toll. By 2018, the USA had fallen to 29th. This year’s ranking of 41st is the lowest ever.
Losers in the 2022 rankings
Other economies to fall badly in the IAREM rankings over the last year include China, France, the United Kingdom, India, Hong Kong and Canada. Strong improvers included Portugal, Japan, Vietnam, the Philippines, Israel and the United Arab Emirates.
Switzerland deserves top spot. It is the only country to have ranked in the top six global economies every year since the IAREM was first published in 2013.
Its economy is robust, reflects decades of experience and discipline, and the longer it matures, the spicier it becomes. Just like its Appenzeller raw milk cheese.
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The original IAREM article is available here for free:
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“Alan Austin is a great Australian journalist and,
I think, a pirate. I steal Alan Austin’s findings all the time.”
~ Jordan Shanks