Thailand 'least miserable' country on planet

09 สิงหาคม 2559

Bloomberg Misery Index adds unemployment to inflation & Thailand is lowest in world but beware of the deflationary spiral.

ECONOMICS

Thailand 'least miserable' country on planet

8/08/2016
Bloomberg

The Land of Smiles really does seem to be the "happiest place in the world" according to the latest research, at least in terms of holding a job and keeping the rising cost of goods and cost of living in check.

The so-called "Misery Index", computed by adding inflation to the unemployment rate, gives Thailand a score of 1.11%, which is the best -- or least miserable -- for all 74 economies surveyed by Bloomberg news.

LEAST MISERABLE PLACES ON EARTH

After Thailand in first place come Singapore and Japan, close runner-ups, with 1.4% and 2.7%, respectively.

The United Kingdom ranks the 17th least miserable country while the United States takes 21st place.

China follows closely in 23rd spot.

MOST MISERABLE PLACES ON EARTH

Venezuela is at the other end of the misery scale, getting top prize for most miserable.

Plunging oil revenues have led to chronic shortage of food and medicine in the country.

Inflation in the country is running at 181% (so-called "hyper-inflation").

With an misery index of 188.2%, the South American country is easily the “world’s most miserable” place.

Venezuela is followed by Bosnia in Eastern Europe at 48.97% and South Africa at 32.9%.

DISINFLATION HAS A GOOD SIDE & A BAD SIDE

Thailand’s unemployment rate was only around 1% at the end of June.

Thailand's inflation as measured by the consumer price index (CPI) rose 0.1% year-on-year in July versus a 0.4% increase in June.

Even so, it’s not all roses and rapture for the Southeast Asian nation.

Slowing inflation, though welcome for consumers, may signal a sluggish and less-than-healthy economy.

DISINFLATION & DEFLATIONARY SPIRALS

Disinflation is defined as a "reduction in the rate of inflation" or "slowing in the rate of price inflation."

Disinflation is a sign that demand for goods and services is insufficient to match supply in an economy,

It encourages consumers to delay purchases until goods become cheaper which further lowers demand.

If demand falls in the whole economy, companies can't sell goods anymore.

If companies can't sell goods then they can't continue to employ workers, so wages fall there are lay offs.

A feedback loop where all outputs of a process are available as causal inputs to that process (Source: Wikipedia).

This could lead to a vicious cycle, a bad situation which causes an even worse situation which causes the situation to get even worse and so on, a chain of events which reinforces itself through a feedback loop (see here & here).

A "feedback loop" occurs when "outputs of a system are routed back as inputs as part of a chain of cause-and-effect that forms a circuit or loop. The system can then be said to feed back into itself" (see here & diagrams on side of page).

The worst-case scenario for disinflation is a so-called "deflationary spiral" that gets worse with every cycle, depicted in this diagram: