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Visualized: Real Interest Rates by Country

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Visualized: Real Interest Rates by Country

Visualized: Real Interest Rates of Major World Economies

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Interest rates play a crucial role in the economy because they affect consumers, businesses, and investors alike.

They can have significant implications for people’s ability to access credit, manage debts, and buy more expensive goods such as cars and houses.

This graphic uses data from Infinity Asset Management to visualize the real interest rates (ex ante) of 40 major world economies, by subtracting projected inflation over the next 12 months from current nominal rates.

ℹ️ Ex ante is Latin for “before the event”, and in this case refers to the fact that this data uses projected inflation rates to calculate real interest rates.

Nominal Interest Rates vs. Real Interest Rates

Nominal interest rates refer to the rate at which money can be borrowed or lent at face value, without considering any other factors like inflation.

Meanwhile, the real interest rate is the nominal interest rate after taking into account inflation, reflecting the true cost of borrowing or lending. Real interest rates can fluctuate over time and are influenced by various factors such as inflation, central bank policies, and economic growth. They can also influence economic growth by affecting investment and consumption decisions.

According to the International Monetary Fund (IMF), since the mid-1980s, real interest rates across several advanced economies have declined steadily.

historical declining rates

As of March 2023, Brazil has the highest real interest rate among the 40 major economies shown in this dataset.

Below we look at Brazil’s situation, along with the data of the four other major economies with the highest real rates in the dataset:

Nominal Interest RateReal Interest Rate
🇧🇷 Brazil13.75%6.94%
🇲🇽 Mexico 11.00%6.05%
🇨🇱 Chile 11.25%
4.92%
🇵🇭 Philippines6.00%2.62%
🇮🇩 Indonesia 5.75%2.45%

In general, countries with high interest rates offer investors higher yields on their investments but also come with higher risks due to volatile economies and political instability.

Below are the five countries in the dataset with the lowest real rates:

Nominal Interest Rate Real Interest Rate
🇦🇷 Argentina78.00%-19.61%
🇳🇱 Netherlands3.50%-7.42%
🇨🇿 Czech Republic7.00%-7.17%
🇵🇱 Poland 6.75%-6.68%
🇧🇪 Belgium3.50%-6.42%

Hyperinflation, as seen in Argentina, can lead to anomalies in both real and nominal rates, causing problems for the country’s broader economy and financial system.

As you can see above, with a 78% nominal interest rate, Argentina’s real interest rates remain the lowest on the planet due to a staggering annual inflation rate of over 100%.

Interest Rate Outlook

Increasing inflation and tighter monetary policy have resulted in rapid increases in nominal interest rates recently in many countries.

However, IMF analysis suggests that recent increases could be temporary.

Central banks in advanced economies are likely to ease monetary policy and bring interest rates back to pre-pandemic levels when inflation is brought under control, according to the fund.

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Markets

Will Tesla Lose Its Spot in the Magnificent Seven?

We visualize the recent performance of the Magnificent Seven stocks, uncovering a clear divergence between the group’s top and bottom names.

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Will Tesla Lose Its Spot in the Magnificent Seven?

This was originally posted on our Voronoi app. Download the app for free on iOS or Android and discover incredible data-driven charts from a variety of trusted sources.

In this graphic, we visualize the year-to-date (YTD) performance of the “Magnificent Seven”, a leading group of U.S. tech stocks that gained prominence in 2023 as the replacement of FAANG stocks.

All figures are as of March 12, 2024, and are listed in the table below.

RankCompanyYTD Change (%)
1Nvidia90.8
2Meta44.3
3Amazon16.9
4Microsoft12
5Google0.2
6Apple-6.7
7Tesla-28.5

From these numbers, we can see a clear divergence in performance across the group.

Nvidia and Meta Lead

Nvidia is the main hero of this show, setting new all-time highs seemingly every week. The chipmaker is currently the world’s third most valuable company, with a valuation of around $2.2 trillion. This puts it very close to Apple, which is currently valued at $2.7 trillion.

The second best performer of the Magnificent Seven has been Meta, which recently re-entered the trillion dollar club after falling out of favor in 2022. The company saw a massive one-day gain of $197 billion on Feb 2, 2024.

Apple and Tesla in the Red

Tesla has lost over a quarter of its value YTD as EV hype continues to fizzle out. Other pure play EV stocks like Rivian and Lucid are also down significantly in 2024.

Meanwhile, Apple shares have struggled due to weakening demand for its products in China, as well as the company’s lack of progress in the artificial intelligence (AI) space.

Investors may have also been disappointed to hear that Apple’s electric car project, which started a decade ago, has been scrapped.

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