The world’s most — and least — miserable economies in 2025, ranked

Each year, I produce Hanke’s Annual Misery Index (HAMI). They call me the “money doctor” for my globe-spanning career of economic advisory missions, and by using readily available economic data, I can measure the temperature of the patient, so to speak, to determine just how “miserable” or “healthy” an economy is.

The idea of a misery index was fathered by Arthur Okun, a distinguished economist and Yale professor who served as chairman of the President’s Council of Economic Advisers from 1968 to 1969 during President Lyndon B. Johnson’s administration. Johnson wanted an easy way to take the economy’s temperature. Okun’s index, which he used for the United States, is equal to the sum of the inflation and unemployment rates.

Okun’s misery index was modified by Harvard professor Robert Barro in 1999, by including the 30-year government-bond yield and the difference between the long-term-trend rate of real GDP growth and the actual rate of real GDP growth.

In 2009, I amended Barro’s version of the misery index by replacing the 30-year government-bond yield with lending rates, and by replacing the difference between the long-term-trend rate of real GDP growth and the actual rate of real GDP growth with the growth rate of real GDP per capita.

Then, in 2022, I made a further amendment to HAMI. Following Andrew Oswald’s (University of Warwick) suggestion, I decided to double the weight put on the unemployment-rate component in HAMI. The intuition is that an additional percentage point of unemployment hits people a lot harder than an additional percentage point of inflation. So, HAMI is the sum of the year-end unemployment (multiplied by two), inflation, and bank-lending rates, minus the annual percentage change in real GDP per capita.

Some might protest that the inflation rate and bank lending rate are correlated, and therefore HAMI double-counts the effects of inflation. Similar to the doubling of the unemployment weight, this is by design. The logic for this is rooted in loss aversion: People perceive losses as more significant than gains. Therefore, two items that contain inflation are included while the growth rate in real GDP per capita, a gain, is not double weighted.

Unlike Okun and Barro, who focused on the United States, HAMI covers many foreign countries; 178 are included in the 2025 edition — a new record.

Sources: Economist Intelligence Unit (including estimates), International Monetary Fund World Economic Outlook, World Bank, International Labor Organization, and individual Central Banks and Statistical Institutes of each country.

Note: The Misery Index is the sum of the unemployment rate multiplied by 2, the end-period consumer prices rate, and the lending rate, minus the growth in Real GDP Per Capita. The median of the 2025 Annual Misery Index is 21.85. The mean of the 2025 Annual Misery Index is 31.64.

Calculations by Professor Steve H. Hanke, The Johns Hopkins University

The Rankings in Context

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