Consumers in Venezuela are expected to suffer the most in 2015
Inflation is a disease that can wreck a society, Milton Friedman,
the late Nobel laureate economist, once said. Add rising unemployment
to the diagnosis, and his profession ascribes a rather non-technical
term to the debilitating effect on people: misery.
That affliction this year will be most acute in Venezuela, Argentina,
South Africa, Ukraine and Greece — the five most painful economies in
which to live and work, according to Bloomberg survey data that make up
the so-called misery index for 2015. (It's a simple equation:
unemployment rate + change in the consumer price index = misery.)
In Ukraine's case, war will exact greater economic casualties. Tension with
Russia-backed rebels will prolong joblessness in the eastern-European
nation, and inflation won't offer much relief, the surveys showed. The
one-two punch means Ukrainian consumers are set to be the fourth-saddest
among 51 economies (including the euro area) based on forecasts for the
misery measure.
Adding to the agony is the relatively abysmal income growth that will
fail to cushion Ukrainian households against the still-surging prices.
At $8,494 gross domestic product per capita this year, Ukraine only
edges out the Philippines among the countries surveyed and measured with
the International Monetary Fund's proxy for resident income.
Unemployment probably will climb to 9.5 percent in Ukraine this year
from its 8.9 percent rate as of the third quarter in 2014, the survey
data show. Inflation is projected to rise at a 17.5 percent pace in
2015, compared with the 24.9 percent December year-over-year rate.
The depressing expectations for Ukraine still aren't quite as bad as
what the embattled nation faced in 2014, when it finished second in the
misery index. The 2015 projections, dismal as they are, would make
Ukraine bright enough to jump past South Africa and Argentina from last
year's misery-index readings.
The three countries that will probably see the most economic misery
in 2015 — South Africa, Argentina and Venezuela — haven't budged much
from their 2014 rankings, when they occupied three of the top four
spots, the data showed.
At 78.5 percent, the estimated CPI inflation rate in back-to-back,
most-miserable Venezuela more than quadruples Ukraine's inflation rate.
The dire shortage of basic goods in Venezuela last week prompted
neighboring Trinidad & Tobago to offer a tissue paper-for-oil swap.
Five years after investors popularized the term "PIIGS"
to describe a handful of European countries with bloated budget
deficits, four of those five countries remain in dire straits, according
to their projected misery indexes.
Greece is 5th, Spain is 6th, Portugal is 10th and Italy is 11th
in this year's ranking, though each show about average projected income
levels relative to survey peers. (Ireland happily sits further down the
chain at No. 16 in the misery ranking and with a
much-better-than-average GDP per capita of $48,787. The 51 economies in
our misery index average GDP per capita of $31,079.)
Enough of the sad news. For the glass-half-full take, stay tuned for our take on the most consumer-friendly economies in 2015.
Note: Figures reflect the latest research, private forecasts and survey data compiled by Bloomberg as of Feb. 27.
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