Every country has an economy that is unique.
In some places, such as the United States or Germany, economies are able to produce many different goods and services that get exported around the world. These countries tend to house world-class businesses in sectors like financials, technology, consumer goods, and healthcare, with companies that produce highly specialized goods like automobiles, software, or pharmaceutical products. Ultimately, these are innovative economies that can roll with the punches, creating growth even when prospects are dim.
In other places, this level of sophistication is just not there. Innovation and knowledge are stunted or non-existent for most industries, and these countries may focus exclusively on one or two goods to pay the bills. Venezuela’s reliance on oil is an obvious example of this, but there are even many Western countries that miss the mark here as well.
Measuring Economic Complexity
In 2009, a team at Harvard formalized a measure of economic complexity that compared nations based on the sophistication of their economies. Now known as the Economic Complexity Index (ECI), the exact measurement is complicated, but it essentially uses data on two main things to uncover the underlying level of economic complexity:
1. Economic Diversity
Measures how many different products a country can produce.
2. Economic Ubiquity
Measures how many countries are able to make those products.
In other words: if a country produces only a few goods, that economy is not very complex. Further, if a country produces many different products, but they are all simple ones that can be replicated elsewhere, the economy is still not complex. See full details on the project here.
Ranking the Most Complex Economies
Here are the most complex economies in order, along with the changing rankings over time:
As you’ll notice, the most recent set of data is from 2015.
Topping the list are the economies of Japan (1st), Switzerland (2nd), Germany (3rd), and South Korea (4th). The United States sits in 9th place, and Canada is further down at 33rd.
Australia, which relies heavily on commodities, ranks notably low for Western countries in 73rd place, where it is sandwiched between Kazakhstan and the Dominican Republic.
Movers and Shakers
The most recent iteration of the index also highlighted some movers and shakers over the last 10 year period:
In particular, the crisis in Venezuela has had an effect on economic complexity, eroding any sophistication that existed.
Meanwhile, Cuba’s economy is also in the decline in terms of sophistication – and with major exports including raw sugar (27%), rolled tobacco (15%), nickel (12%), oil (11%), hard liquor (7%), and crustaceans (4%), it’s not hard to see why.
On the opposite side of the spectrum, the Philippines is the biggest mover upwards, ascending 28 spots.
Some African countries are also moving fast up the rankings: Botswana, Malawi, Uganda, and Cameroon each jumped over 20 spots.
COVID-19 Crash: How China’s Economy May Offer a Glimpse of the Future
China has seen a severe economic impact from COVID-19, and it may be a preview of what’s to come for countries in the early stages of the outbreak.
The Economic Impact of COVID-19
China, once the epicenter of the COVID-19 pandemic, appears to be turning a corner. As the number of reported local transmission cases hovers near zero, daily life is slowly returning to normal. However, economic data from the first two months of the year shows the damage done to the country’s finances.
Today’s visualization outlines the sharp losses China’s economy has experienced, and how this may foreshadow what’s to come for countries currently in the early stages of the outbreak.
A Historic Slump
The results are in: China’s business activity slowed considerably as COVID-19 spread.
|Economic Indicator||Year-over-year Change (Jan-Feb 2020)|
|Investment in Fixed Assets*||-24.5%|
|Value of Exports||-15.9%|
*Excluding rural household investment
As factories and shops reopen, China seems to be over the initial supply side shock caused by the lockdown. However, the country now faces a double-headed demand shock:
- Domestic demand is slow to gain traction due to psychological scars, bankruptcies, and job losses. In a survey conducted by a Beijing financial firm, almost 65% of respondents plan to “restrain” their spending habits after the virus.
- Overseas demand is suffering as more countries face outbreaks. Many stores are closing up shop and/or cancelling orders, leading to an oversupply of goods.
With a fast recovery seeming highly unlikely, many economists expect China’s GDP to shrink in the first quarter of 2020—the country’s first decline since 1976.
Danger on the Horizon
Are other countries destined to follow the same path? Based on preliminary economic data, it would appear so.
About half the U.S. population is on stay-at-home orders, severely restricting economic activity and forcing widespread layoffs. In the week ending March 21, total unemployment insurance claims rose to almost 3.3 million—their highest level in recorded history. For context, weekly claims reached a high of 665,000 during the global financial crisis.
“…The economy has just fallen over the cliff and is turning down into a recession.”
—Chris Rupkey, Chief Economist at MUFG in New York
In addition, manufacturing activity in eastern Pennsylvania, southern New Jersey, and Delaware dropped to its lowest level since July 2012.
Other countries are also feeling the economic impact of COVID-19. For example, global online bookings for seated diners have declined by 100% year-over-year. In Canada, nearly one million people have applied for unemployment benefits.
Hard-hit countries such as Italy and Spain, which already suffer from high unemployment, are also expecting to see economic blows. However, it’s too soon to gauge the extent of the damage.
Light at the End of the Tunnel
Given the near-shutdown of many economies, the IMF is forecasting a global recession in 2020. Separately, the UN estimates COVID-19 could cause up to a $2 trillion shortfall in global income.
On the bright side, some analysts are forecasting a recovery as early as the third quarter of 2020. A variety of factors, such as government stimulus, consumer confidence, and the number of COVID-19 cases, will play into this timeline.
You’re Grounded: The COVID-19 Effect on Global Flight Capacity
The COVID-19 pandemic is throwing everything up in the air—including the fate of airline companies. See how global flight capacity has gone into a tailspin.
You’re Grounded: The COVID-19 Effect on Flight Capacity
It’s not an exaggeration to say that the COVID-19 pandemic has thrown the world into a tailspin.
As the number of new cases continues to surge in parts of the world, numbers are beginning to decline in others as public health officials and governments tirelessly work to slow the contagion and reach of the virus.
The potent combination of trip cancellations and country-specific restrictions on international flights has had a staggering impact on the $880 billion global airline industry. Today’s visualization highlights data from the OAG Aviation Worldwide, which tracks how global flight capacity differs from last year’s numbers.
Asia Faced the First Hard Landing
Nearly all countries have some type of travel advisory in place, with many encouraging people to avoid non-essential travel even before COVID-19 was officially considered a pandemic by the World Health Organization (WHO).
The earliest impacts of these were felt in February, as flight capacity in and out of China dropped sharply around Lunar New Year. Also, the country’s sharpest year-over-year drop was recorded on February 17, 2020, with a 71% drop in flights compared to the same date in 2019.
Flight capacity for Hong Kong, which was already seeing its traveler numbers declining due to months-long protests, continues its slump. As of March 16, 2020, it was down by an immense 81% compared to 2019 – the most of any jurisdiction represented in the data.
Monitoring the Situation Elsewhere
Meanwhile in Europe, Italy saw a 22% drop in flights coinciding with the announcement of a national lockdown on March 9, 2020. Now that the situation has intensified, flights to and from Italy have plummeted 74% from their normal rates.
On March 11, 2020, the U.S. enforced a 30-day ban on travelers from the Schengen Area, a free-travel zone consisting of 26 countries in Europe. Although the UK and Ireland were initially exempt, the ban has since been extended to include both countries as well.
Meanwhile, as of March 17th, the U.S.-Canada border is closed for all non-essential travel. This follows a previous announcement from the Canadian government that it would be curbing entry to only Canadian citizens, family members, permanent residents, diplomats, and Americans.
Broadly speaking, countries around the world are taking similar actions to limit the spread of the virus and “flatten the curve”:
|Measure Taken||Example Countries*|
|Suspending flights from specific countries||🇺🇸United States, 🇹🇷Turkey|
|Returning citizens must enter through specific airports||🇨🇦Canada, 🇺🇸United States|
|Mandatory screening||🇮🇹Italy, 🇧🇴Bolivia|
|14 day self-quarantine||🇮🇱Israel, 🇬🇷Greece|
|Complete closure of borders||🇬🇹Guatemala, 🇵🇪Peru|
*As of March 17, 2020
More Turbulent Times Ahead?
As both COVID-19 and the global response to it continues to evolve, here are the largest flight capacity reductions across a few more countries in the past week:
|Country||09 Mar 2020 Flights||16 Mar 2020 Flights||% Change (16 Mar vs 9 Mar)|
|🇸🇦 Saudi Arabia||1,301,605||1,102,472||-15.3%|
|🇰🇷 South Korea||795,752||710,558||-10.7%|
Naturally, the economic impact on airlines has been immense. Nearly 40% of flights impacted by the European travel bans are U.S. based, such as Delta and United Airlines, with billions in lost revenue already estimated for this year.
Many airlines worldwide face the threat of bankruptcy in coming months, if these declining trends continue. To hedge against these domino effects of the outbreak, U.S. airlines are requesting upwards of $60 billion in bailouts and direct assistance from the government.
COVID-19 is throwing everything up in the air—including the fate of airline companies. It’s not yet clear when these stringent travel restrictions may be lifted, but one can only hope that these airlines do not have to continue to weather the storm much longer.
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