Economy
Mapped: Economic Freedom Around the World
Mapped: Economic Freedom Around the World
How would you define a country’s economic freedom?
The cornerstones of economic freedom by most measures are personal choice, voluntary exchange, independence to compete in markets, and security of the person and privately-owned property. Simply put, it is about the quality of political and economic institutions in countries.
Based on the Index of Economic Freedom by the Heritage Organization, we mapped the economic freedom of 178 countries worldwide.
Measures of Economic Freedom
The index uses five broad areas to score economic freedom for each country:
- Size of Government: Greater government spending, taxation, and bigger government agencies tend to reduce individual choice and economic freedom.
- Legal System and Property Rights: The ability to accumulate private property and wealth is a central motivating force for workers and investors in a market economy, and well-functioning legal frameworks protect the rights of all citizens.
- Sound Money: Does earned money maintain its value, or is it lost to inflation? When inflation is high and volatile, individuals can’t plan for the future and use economic freedom effectively.
- Freedom to Trade Internationally: Freedom to exchange—in its broadest sense, buying, selling, making contracts, and so on—is considered essential to economic prosperity. Limited international trading options significantly reduce the potential for growth.
- Regulation: When governments utilize tools and impose oppressive regulations that limit the right to exchange, economic freedom typically suffers.
World Economic Freedom by Region
In 2021, the global average economic freedom score is 61.6, the highest its been in 27 years.
But from Mauritius and smaller African nations being beacons of hope to East Asian and Oceanic countries epitomizing economic democracy, every region has a different story to tell.
Let’s take a look at the economic freedom of each region in the world.
Americas
Even though the U.S. and Canada continue to be some of the most economically free countries globally, some markers are suffering.
The regional average unemployment rate has risen to 6.9%, and inflation (outside of Venezuela) has increased to 5.2%. The region’s average level of public debt—already the highest globally—rose to 85.2% of its GDP during the past year.
Across many Latin American countries, widespread corruption and weak protection of property rights have aggravated regulatory inefficiency and monetary instability.
For example, Argentina’s Peronist government has recently fixed the price of 1,432 products as a response to a 3.5% price rise in September, the equivalent to a 53% increase if annualized.
Europe
More than half of the world’s 38 freest countries (with overall scores above 70) are in Europe. This is due to the region’s relatively extensive and long-established free-market institutions, the robust rule of law, and exceptionally strong investment freedom.
However, Europe still struggles with a variety of policy barriers to vigorous economic expansion. This includes overly protective and costly labor regulations, which was one of the major reasons why the UK voted to leave the EU.
Brexit has since had a major impact on the region.
Even a year later, official UK figures showed a record fall in trade with the EU in January 2021, as the economy struggled with post-Brexit rules and the pandemic.
Africa
Dictatorships, corruption, and conflict have historically kept African nations as some of the most economically repressed in the world.
While larger and more prosperous African nations struggle to advance economic freedom, some smaller countries are becoming the beacon of hope for the continent.
Mauritius (rank 11), Seychelles (43) and Botswana (45) were the top African countries, offering the most robust policies and institutions supporting economic self-sufficiency.
From property rights to financial freedom, small African countries are racing ahead of the continent’s largest in advancing economic autonomy as they look to build business opportunities for their citizens.
Middle East and Central Asia
When Israel, the UAE, and Bahrain signed the Abraham Accords last year, there was a sense of a new paradigm emerging in a region with a long history of strife.
A year into the signing of this resolution, the effects have been promising. There have been bilateral initiatives within the private sector and civil society leading to increasing economic and political stability in the region.
Central Asian countries once part of the Soviet Union have recently starting integrating more directly with the world economy, primarily through natural resource exports. In total, natural resources account for about 65% of exports in Kyrgyzstan, Tajikistan, and Uzbekistan, and more than 90% in Kazakhstan and Turkmenistan.
Despite this progress, these countries have a long way to go in terms of economic freedom. Uzbekistan (108), Turkmenistan (167) and Tajikistan (134) are still some of the lowest-ranked countries in the world.
East Asia and Oceania
Despite massive populations and strong economies, countries like China and India remain mostly unfree economies. The modest improvements in scores over the last few years have been through gains in property rights, judicial effectiveness, and business freedom indicators.
Nearby, Singapore’s economy has been ranked the freest in the world for the second year in a row. Singapore remains the only country in the world that is considered economically free in every index category.
Finally, it’s worth noting that Australia and New Zealand are regional leaders, and are two of only five nations that are currently in the “free” category of the index.
Economy
Economic Growth Forecasts for G7 and BRICS Countries in 2024
The IMF has released its economic growth forecasts for 2024. How do the G7 and BRICS countries compare?
G7 & BRICS Real GDP Growth Forecasts for 2024
The International Monetary Fund’s (IMF) has released its real gross domestic product (GDP) growth forecasts for 2024, and while global growth is projected to stay steady at 3.2%, various major nations are seeing declining forecasts.
This chart visualizes the 2024 real GDP growth forecasts using data from the IMF’s 2024 World Economic Outlook for G7 and BRICS member nations along with Saudi Arabia, which is still considering an invitation to join the bloc.
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Mixed Economic Growth Prospects for Major Nations in 2024
Economic growth projections by the IMF for major nations are mixed, with the majority of G7 and BRICS countries forecasted to have slower growth in 2024 compared to 2023.
Only three BRICS-invited or member countries, Saudi Arabia, the UAE, and South Africa, have higher projected real GDP growth rates in 2024 than last year.
Group | Country | Real GDP Growth (2023) | Real GDP Growth (2024P) |
---|---|---|---|
G7 | 🇺🇸 U.S. | 2.5% | 2.7% |
G7 | 🇨🇦 Canada | 1.1% | 1.2% |
G7 | 🇯🇵 Japan | 1.9% | 0.9% |
G7 | 🇫🇷 France | 0.9% | 0.7% |
G7 | 🇮🇹 Italy | 0.9% | 0.7% |
G7 | 🇬🇧 UK | 0.1% | 0.5% |
G7 | 🇩🇪 Germany | -0.3% | 0.2% |
BRICS | 🇮🇳 India | 7.8% | 6.8% |
BRICS | 🇨🇳 China | 5.2% | 4.6% |
BRICS | 🇦🇪 UAE | 3.4% | 3.5% |
BRICS | 🇮🇷 Iran | 4.7% | 3.3% |
BRICS | 🇷🇺 Russia | 3.6% | 3.2% |
BRICS | 🇪🇬 Egypt | 3.8% | 3.0% |
BRICS-invited | 🇸🇦 Saudi Arabia | -0.8% | 2.6% |
BRICS | 🇧🇷 Brazil | 2.9% | 2.2% |
BRICS | 🇿🇦 South Africa | 0.6% | 0.9% |
BRICS | 🇪🇹 Ethiopia | 7.2% | 6.2% |
🌍 World | 3.2% | 3.2% |
China and India are forecasted to maintain relatively high growth rates in 2024 at 4.6% and 6.8% respectively, but compared to the previous year, China is growing 0.6 percentage points slower while India is an entire percentage point slower.
On the other hand, four G7 nations are set to grow faster than last year, which includes Germany making its comeback from its negative real GDP growth of -0.3% in 2023.
Faster Growth for BRICS than G7 Nations
Despite mostly lower growth forecasts in 2024 compared to 2023, BRICS nations still have a significantly higher average growth forecast at 3.6% compared to the G7 average of 1%.
While the G7 countries’ combined GDP is around $15 trillion greater than the BRICS nations, with continued higher growth rates and the potential to add more members, BRICS looks likely to overtake the G7 in economic size within two decades.
BRICS Expansion Stutters Before October 2024 Summit
BRICS’ recent expansion has stuttered slightly, as Argentina’s newly-elected president Javier Milei declined its invitation and Saudi Arabia clarified that the country is still considering its invitation and has not joined BRICS yet.
Even with these initial growing pains, South Africa’s Foreign Minister Naledi Pandor told reporters in February that 34 different countries have submitted applications to join the growing BRICS bloc.
Any changes to the group are likely to be announced leading up to or at the 2024 BRICS summit which takes place October 22-24 in Kazan, Russia.
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This visual is part of an exclusive special dispatch for VC+ members which breaks down the key takeaways from the IMF’s 2024 World Economic Outlook.
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