Gloomy data was carried from the previous year into 2023 by the global economy, amidst expectations of a worldwide recession as a result of soaring inflation rates in the aftermath of the coronavirus pandemic and subsequent international events such as the Russia-Ukraine war. This, in addition to various crises like rising oil prices and others, has painted a rather bleak picture. However, 2023 has surprisingly depicted a different economic scenario.
"The Economist" newspaper compiled economic and financial indicators that covered inflation rates, Gross Domestic Product (GDP), employment, and stock market performance for 35 countries.
Contrary to expectations, the global GDP has increased by an estimated 3%, according to "The Economist," indicating a robust economic growth despite the faced challenges.
Employment markets maintained some stability, while inflation rates saw significant reductions in several countries. Furthermore, global stock markets experienced a 20% increase, as reported by the newspaper.
Top Performers
Behind these significant positive indicators lie stories of economies that have performed well over the year, and "The Economist" analyzes reveal the secret to these positive figures.
For the second year in a row, the Greek economy ranked first in "The Economist's" classification, which the newspaper hailed as an "astonishing achievement" for an economy previously known for poor and failed management.
South Korea took the second place, while several burgeoning countries in the Americas stood out, with the United States ranking third and Canada and Chile not far from the lead. In contrast, overall Northern European countries lagged behind, including Britain, Germany, Sweden, and Finland, which was at the bottom of the rankings.
"The Economist" stated that combating relentless rising prices was the greatest challenge in 2023. It pointed out the success of countries like Japan and South Korea in controlling "core inflation," maintaining stable prices.
In Switzerland, core inflation increased by 1.3% on an annual basis, while other parts of Europe still face serious pressures. Hungary's core inflation rose by over 11% annually, a situation Finland faces as well, according to the newspaper.
The newspaper mentioned a shrinkage in the global inflation spread curve, which calculates the percentage increase in the prices of items in the consumer basket that have risen by more than 2% on an annual basis—lower than expected.
Central banks that had raised interest rates in 2022, like those in Chile and South Korea, reaped the benefits of this hike in this year as inflation rates fell.
Although 2023 did not record spectacular performance anywhere, only a few countries experienced a decrease in GDP, "The Economist" notes. Ireland registered the largest GDP drop at 4.1%, with Britain and Germany also performing weakly. Germany suffers from the repercussions of energy price shocks and increasing competition from imported Chinese cars, while Britain still contends with post-Brexit consequences, as described by the newspaper.
Solid Performance
"The Economist" regarded the United States as having achieved a solid GDP performance, benefiting from record energy production and the impact of generous financial incentives implemented between 2020 and 2021. This effect also extended to other countries, as employment in Canada rose more than expected.
However, the newspaper pointed out that despite the good performance of the U.S. job market, it did not fully translate to the stock market there, particularly the high-tech company sector, which everyone thought was poised to benefit from the artificial intelligence revolution that started at the beginning of the year, recorded a median performance when measured against inflation.
The Australian stock market's performance was underwhelming, while Finland's stock prices dipped, contrary to Japanese corporate stocks that are experiencing a renaissance phase, as described by the report, after nearly a 20% rise in value.
In addition to the significant performance of the Japanese stock market, the Greek stock market emerged prominently, unbeatable at the top, with the real value of its stock market increasing by more than 40%. This was due to the government's execution of a series of market-oriented economic reforms.
Despite Greece still being much less affluent than before its early 2010s catastrophe, the IMF, which Athens once labeled as the "enemy," recently praised the country for its "digital economic transformation" and "increase in market competition."
