Spain is the developed country with the worst unemployment and inflation figures, as demonstrated in is what is known as the 'Misery Index'. This index was created in the 1970s by the economist Arthur Okun and every year the Fraser Institute publishes the results of the world's main economies. Currently, practically 90% of the countries are above the average of the last five years, which in practice means a loss of purchasing power for households, and Spain is the worst off in the latest edition.
Individually, Spain is not the country with the highest unemployment rate, a position occupied by Greece, nor is it the country with the highest rise in prices (last year Iceland, Canada, Germany and the USA had a higher CPI). However, Spain does lead the global ranking. According to IMF data, inflation added to the unemployment rate in Spain stood at around 18% in 2021, the worst result amongst developed countries, followed by Greece, Italy, Iceland, Sweden and Canada. On the other hand, the last five places in the ranking are occupied by Taiwan, Andorra, Singapore, Switzerland and Japan.
In 2022, we can expect to see a general worsening of the developed world's misery index, taking into account the sharp rise in energy prices and the potential economic impact of the war between Russia and Ukraine, depending on its duration.
In the case of Spain, inflation stood at 7.6% in February, according to the Spanish Institute of National Statistics (INE). Looking ahead to the end of the year, initial figures show the average annual inflation at over 5%, and the unemployment rate at close to 14%. Therefore, this year the misery index in Spain could approach 20% if these forecasts are fulfilled.
If we take a look at the historical evolution, we discover that Spain has been close to 30% on two occasions in the last 40 years, the most recent being during the crisis of the 1990s, when the unemployment rate was close to 25% and the CPI reached 6.5%, as a consequence of devaluations of the peseta in 1992 and 1995. The all-time highs came in the 1970s, after the world oil crisis and in the midst of the Transition, when the misery index stood at around 34%. On the other hand, in the summer of 2007, just before the economic, financial and real estate crisis broke out, it reached a low of 10.2%.
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