The pandemic has highlighted how populism and poor institutional quality can lead to poor economic and health outcomes. Eastern Europe and the Anglosphere stand out as the biggest EM and DM underperformers. Conversely, East Asia and the Nordics have performed the best.
- Populism, weak institutions and under developed healthcare systems played key roles in determining which countries suffered the largest losses of life and economic dislocations through the pandemic.
- We have ranked 43 markets based on three metrics – cumulative economic output vs trend, cumulative core inflation vs target, and excess mortality – to form a Misery Index tailored for the pandemic.
- EMs have underperformed DMs on average, partly because of their less developed health care systems and slower vaccination rollouts, but also weaker political and policy institutions.
- However, dispersion has been very high. Eastern Europe and Latin America stand out as the worst performers, much of Asia navigated the pandemic more successfully.
- The poor performance of the UK and US relative to their developed peers, shows that policy errors and institutional weaknesses are not limited to EMs. In contrast, the Nordics and the Germanic countries are home to many of the best achievers.
- The pandemic was always going to be hard to navigate. The coincidence for much of the globe between ‘misery’ and our ESG rankings shows that lower institutional quality and populist policies led to greater suffering and economic dislocation. This provides further justification for considering ESG factors when assessing resilience of economies to future crises and judging appropriate risk premia.