Steve Hanke has analyzed 156 countries, and the top 10 includes Cuba, the world’s poorest country, and three other American continent nations: Venezuela in second place, Argentina sixth and Brazil ninth.
The island, “with a dramatic slump compared to last year’s HAMI, now has the inglorious title of the most miserable country of 2021 (…)”, Hanke said in his notes.
CUBANET highlights that Cuba’s score was “driven by a staggering 1,221.8 percent annual inflation. This level of inflation was not surprising given the Cuban peso’s 95 percent devaluation in 2021. Currency devaluations lead to increased inflation rates. In fact, after a devaluation, inflation will increase and so will the cost of producing goods and services, including exports, in the country that has devalued its currency.
Likewise, the economist added that “inflation will wipe out any potential shortterm competitive advantage that might initially accompany devaluation. This is exactly what happened in Cuba. Of course in Cuba it’s not so miserable if you’re favored by the party and you get a loan that will have a negative real interest rate of about 1219 percent.
According to Hanke, the inflation crisis in Cuba could easily be solved “by setting up a currency board for a marketoriented Cuba. A currency board issues convertible bonds and coins on demand in a foreign anchor currency at a fixed exchange rate. It is required to hold reserves in anchor currency equal to 100 percent of its monetary liabilities. A currency board’s currency is a clone of its anchor currency. Currency boards exist in about 70 countries. Nobody failed,” he said.
Hanke asserts that “the human condition falls into a broad spectrum between ‘miserable’ and ‘happy’, and in the economic realm, misery tends to result from high inflation, high borrowing costs, and unemployment.” “So the surest way to alleviate this misery is through economic growth.
The top 10 countries with the worst economies in the world:
- Cuba
- Venezuela
- Sudan
- Lebanon
- Zimbabwe
- Argentina
- Suriname
- Angola
- Brazil
- Iran