Each year, I produce Hanke’s Annual Misery Index (HAMI). They call me the “money doctor” for my globe-spanning career of economic advisory missions, and by using readily available economic data, I can measure the temperature of the patient, so to speak, to determine just how “miserable” or “healthy” an economy is.
The idea of a misery index was fathered by Arthur Okun, a distinguished economist and Yale professor who served as chairman of the President’s Council of Economic Advisers from 1968 to 1969 during President Lyndon B. Johnson’s administration. Johnson wanted an easy way to take the economy’s temperature. Okun’s index, which he used for the United States, is equal to the sum of the inflation and unemployment rates.
Okun’s misery index was modified by Harvard professor Robert Barro in 1999, by including the 30-year government-bond yield and the difference between the long-term-trend rate of real GDP growth and the actual rate of real GDP growth.
In 2009, I amended Barro’s version of the misery index by replacing the 30-year government-bond yield with lending rates, and by replacing the difference between the long-term-trend rate of real GDP growth and the actual rate of real GDP growth with the growth rate of real GDP per capita.
Then, in 2022, I made a further amendment to HAMI. Following Andrew Oswald’s (University of Warwick) suggestion, I decided to double the weight put on the unemployment-rate component in HAMI. The intuition is that an additional percentage point of unemployment hits people a lot harder than an additional percentage point of inflation. So, HAMI is the sum of the year-end unemployment (multiplied by two), inflation, and bank-lending rates, minus the annual percentage change in real GDP per capita.
Some might protest that the inflation rate and bank lending rate are correlated, and therefore HAMI double-counts the effects of inflation. Similar to the doubling of the unemployment weight, this is by design. The logic for this is rooted in loss aversion: People perceive losses as more significant than gains. Therefore, two items that contain inflation are included while the growth rate in real GDP per capita, a gain, is not double weighted.
Unlike Okun and Barro, who focused on the United States, HAMI covers many foreign countries; 178 are included in the 2025 edition — a new record.
Sources: Economist Intelligence Unit (including estimates), International Monetary Fund World Economic Outlook, World Bank, International Labor Organization, and individual Central Banks and Statistical Institutes of each country.
Note: The Misery Index is the sum of the unemployment rate multiplied by 2, the end-period consumer prices rate, and the lending rate, minus the growth in Real GDP Per Capita. The median of the 2025 Annual Misery Index is 21.85. The mean of the 2025 Annual Misery Index is 31.64.
Calculations by Professor Steve H. Hanke, The Johns Hopkins University
The Rankings in Context
The 20 countries that are most miserable in 2025 are, once again, a familiar rogue’s gallery. Of the 20 most miserable countries in 2024, 17 remain in 2025’s top 20. Syria — which occupied a dismal third place in 2024 — has made the most dramatic exit, plunging all the way to 33rd following the fall of the Assad regime. Egypt and São Tomé and Príncipe have also departed. In their place, Botswana, Bosnia and Herzegovina, and Brazil have entered, reflecting persistently high unemployment and elevated borrowing costs. At the happy end of the HAMI distribution, Taiwan retains the title of the world’s happiest economy for the second consecutive year, and Ireland — powered by extraordinary GDP growth — has climbed an impressive 54 positions to become the fourth-happiest economy on earth.
The ten most miserable countries in the world in 2025, listed by descending rank order, were Venezuela, Sudan, Turkey, Iran, Argentina, Eswatini, South Africa, Malawi, Madagascar, and Lebanon. I highlight the first three.
Venezuela: A Catastrophe Without Precedent
Venezuela seizes this year’s top position as the world’s most miserable country, with a HAMI score of 556.5 — the highest recorded in the 2025 edition and a devastating increase from its sixth-place ranking in 2024. The story is one of an accelerating collapse. The Maduro regime, having stolen the July 2024 presidential election and suppressed the democratic opposition by force, triggered a new wave of international sanctions that choked off oil revenues and sent the bolívar into free fall. The Banco Central de Venezuela’s own belated disclosure reveals that consumer prices rose 475.3% in 2025 — the highest inflation rate in the world. Unemployment, meanwhile, surged to 35.1%, reflecting the hollowing-out of a once-diversified economy. With the lending rate at 9.4% and real GDP per capita contracting by 1.6%, every component of HAMI conspires against the Venezuelan people.
Venezuela’s score is not merely the highest in the 2025 edition; it is among the highest ever recorded by HAMI. Until Venezuela replaces the bolívar with the U.S. dollar and establishes the rule of law and property rights, it will remain the world’s most miserable country.
Sudan: Civil War Without End
Sudan drops from first place in 2024 to second, but any improvement in relative standing offers cold comfort to the Sudanese people. The civil war between the Sudanese Armed Forces and the Rapid Support Forces — now in its third year — continues to devastate economic activity, displace millions, and fuel inflation. Sudan’s unemployment rate remains an extraordinary 55.7% — the highest in the world — reflecting the near-total destruction of formal labor markets in the war zones. Inflation, which peaked above 200% in 2024, has moderated to 68.1%. But the bank-lending rate remains at 37%, and real GDP per capita has contracted by 8.9%.
Until the guns fall silent, the HAMI will keep Sudan near the top of the world’s misery rankings.
Turkey: The Interest-Rate Trap
Turkey rises two ranks to third most miserable with a HAMI score of 101.0, driven primarily by a bank-lending rate of 56.7% — the highest in the top ten. Since the Central Bank of the Republic of Turkey reversed its unorthodox monetary policy in mid-2023 and embarked on an aggressive tightening cycle, lending rates have reached punishing levels. Inflation has come down from its 2024 peak but remains elevated at 30.9%. Unemployment stands at 8.4%. Turkey will only come down on HAMI if it adopts a currency board, like the one I helped design and implement in Bulgaria in 1997.
The Year’s Most Notable Movers
Syria: From Third to Thirty-Third
Syria’s improvement of 29 positions — from 3rd most miserable in 2024 to 33rd in 2025 — is among the most remarkable stories in this year’s edition. In December 2024, a rebel offensive led by Hayat Tahrir al-Sham swept through the country with stunning speed, toppling the Assad regime that had ruled Syria since 1970.
The economic effects have been immediate. Syria’s consumer prices fell 12.2 percentage points in 2025, reflecting both the disinflationary shock of regime change and the easing of some war-era supply bottlenecks. But the HAMI score of 41.2 still reflects deep structural damage: unemployment remains at 18%, and real GDP per capita contracted at an annual rate of 5.4%.
Argentina: Progress, Not Yet Salvation
Argentina improves from being the 2nd most miserable country in 2024 to 5th in 2025, with its HAMI score falling from 195.9 to 88.4. This is a tribute to President Javier Milei’s shock-therapy program: inflation fell from 118% to 31.5%, and real GDP per capita grew by 4.0%. However, Argentina’s bank-lending rate stands at a punishing 46%, reflecting the residual cost of years of monetary mismanagement. Unemployment is 7.4%.
Argentina’s improvement of more than 107 HAMI points in a single year is nonetheless noteworthy. It is the largest score reduction of any country in the 2025 edition and a compelling case study in what a determined government can accomplish when it chooses economic sanity over populist spending.
Bolivia: The Year’s Largest Deterioration
Bolivia’s collapse of 47 positions — from 75th most miserable in 2024 to 28th in 2025 — is the largest deterioration of any country in this year’s edition. Bolivia’s HAMI score of 44.0 is driven by a sharp surge in inflation to 20.4%, as the country’s foreign-exchange reserves have been depleted and the government’s ability to maintain its fixed exchange rate has come under severe strain. Real GDP per capita contracted by 1.4%.
Burkina Faso: The Largest Improvement
Burkina Faso’s climb of 69 positions — from 101st most miserable in 2024 to 170th in 2025 — earns it the distinction of the single largest rank improvement in the 2025 edition. Consumer prices actually fell 2.2%, the lending rate declined, and unemployment edged lower, all of which combined to push its HAMI score to just 7.4 — placing it among the ten happiest economies in the world. The improvement is partly driven by favorable commodity dynamics and a statistical rebase, but it is nonetheless a striking result for a Sahelian nation grappling with insurgency and political instability.
Ireland: Growth as a Superpower
Ireland’s ascent of 54 positions — from 121st most miserable in 2024 to 175th in 2025 — makes it the fourth-happiest economy in the world and the second-largest rank improver. Ireland’s engine is a stunning real GDP growth per capita of 11.2%, fueled by multinational corporate activity and Ireland’s position as a European hub for technology and pharmaceutical firms. With unemployment at 4.7%, inflation at 2.7%, and a lending rate of 4.4%, Ireland’s economic headwinds are modest — though it bears noting that Ireland’s GDP figures are well-known to be inflated by multinational corporate booking activity, a quirk that may overstate the welfare gains felt by ordinary Irish residents.
Iran: Sanctions Bite Harder
Iran’s deterioration of 12 positions — from 16th most miserable in 2024 to 4th in 2025 — places Iran in the world’s top five most miserable economies for the first time since the HAMI began its modern coverage. The dominant driver is inflation at 52.6%, fueled by chronic fiscal deficits, ongoing sanctions, and a depreciating rial. The bank-lending rate of 24% adds to the burden. With real GDP per capita contracting by 2.9%, every arrow in Iran’s HAMI points in the wrong direction.
The World’s Happiest Economies
The ten happiest countries in the world in 2025, listed by ascending rank order, were Taiwan, Singapore, Thailand, Ireland, Côte d’Ivoire, Macau, Japan, Qatar, Burkina Faso, and Guinea-Bissau. I highlight the top three below.
Taiwan: The World’s Happiest Economy
Taiwan retains the title of the world’s happiest economy for the second consecutive year, with a HAMI score of 2.1 — the lowest of any country in the 2025 edition. The secret ingredient is real GDP growth per capita of 9.2%, powered by insatiable global demand for Taiwan’s semiconductors and artificial intelligence hardware. Unemployment is low at 3.3%, inflation subdued at 1.3%, and the bank-lending rate at 3.3%.
Geopolitical threats from China notwithstanding, Taiwan’s economy in 2025 is firing on all cylinders.
Singapore: Monetary Discipline Made Manifest
Singapore is a perennial contender at the happiest end of the HAMI, and 2025 is no exception. With a score of 2.6, Singapore’s performance reflects near-full employment at 2.0% unemployment, well-anchored inflation at 1.2%, and solid GDP growth of 4.3% per capita.
Thailand: Consistent Excellence
Thailand is the third-happiest economy in the world in 2025, with a HAMI score of 3.1. Consumer prices actually fell 0.3% — mild deflation — while unemployment stayed at 0.8%. Real GDP per capita grew 2.5%. Thailand’s consistent appearance near the bottom of the HAMI table is no accident: the Bank of Thailand’s monetary framework has delivered low inflation and stable employment for more than a decade.
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