Europe scores lowest on Economic Confidence Index, Asia highest
WASHINGTON, D.C. -- Economic confidence worldwide has improved little since the height of the downturn in 2009. Gallup's global Economic Confidence Index improved eight points over this time period, rising to 18 last year from 10 in 2009. Europe, with a score of -35, has the lowest economic confidence of all regions, and it is the only region that did not improve from 2009 to 2012. Asia has the most positive 2012 Economic Confidence Index score, at 32, up slightly from 27 in 2009.
Economic confidence improved the most in the Commonwealth of Independent States (CIS) region, rising 31 points from 2009 to 2012. The Americas has also seen a significant improvement in economic confidence in 2012, with a positive score of 17. Economic confidence in sub-Saharan Africa and the Middle East and North Africa (MENA) regions, however, has changed little since 2009, both with scores just below zero.
Although the height of the global economic crisis has passed, world residents are still clearly feeling the effects, with many perceiving only modest improvements in their economies. This analysis includes data from 108 countries Gallup surveyed in 2009 and 2012. Gallup did not collect global economic confidence data in 2010 or 2011.
Gallup's Economic Confidence Index is based on the combined responses to two questions: the first asking individuals to rate economic conditions in their country today, and the second, whether they think economic conditions in the country as a whole are getting better or getting worse.
Gallup calculates the Economic Confidence Index by adding the percentage of people rating current economic conditions (["excellent" + "good"] minus "poor") to the percentage saying the economy is ("getting better" minus "getting worse"), and then dividing that sum by two. The Economic Confidence Index has a maximum value of +100 and a minimum value of -100. Values above zero indicate a more positive than negative view of the economy, values below zero indicate net-negative views, and zero indicates that positive and negative views are equal.
Economic Confidence Net Negative in Almost All European Countries
Twenty-three of the 28 European countries included in the analysis had net negative Economic Confidence Index scores in 2012. Greece had the lowest Economic Confidence Index score in the world, at -87, which is down 39 points from 2009. Economic confidence in Cyprus, which is still grappling with a banking crisis, declined 60 points from 2009 to 2012, the largest drop in confidence in Europe and among the largest declines in the world.
Seven European countries experienced double-digit improvements from 2009 to 2012, led by Latvia and Lithuania. Economic confidence in both countries improved by at least 50 points since 2009. Although confidence is still net negative in both countries, Latvia overcame having the lowest score in the world in 2009. Latvia was hard hit during the early years of the recession, but its economy is growing again as the result of economic reforms.
Germany is the only European country that improved from a negative score in 2009 to a positive score in 2012.
China Leads in Economic Confidence in Asia
China leads the Asia region in economic confidence, with a score of 73, which is the third highest in the world, but a slight drop in position since 2009, when it ranked first in the world. China's economic growth has slowed in the past year, which may cause confidence to fall further in 2013. Cambodia, Malaysia, and Thailand also have high net positive scores, but unlike China, these countries experienced double-digit improvements between 2009 and 2012.
Despite residents' overall economic optimism in many Asian countries, not all countries' residents share this perception. Japan's -56 economic confidence score is down seven points since 2009, which is the lowest score among Asian countries. Japan has been facing recession and deflation for almost a decade, which could be the cause of residents' dissatisfaction with their economy.
South Korea, Pakistan, Nepal, and Hong Kong also have negative economic confidence scores, with South Korea experiencing the largest decline from 2009 to 2012 of all Asian countries. South Korea has been suffering from a bad housing market and slumping economy, but the country's first quarter of 2013 saw improved GDP growth. It is possible South Korea's decline in confidence will slow in 2013.
Ukraine Leads Improvement in CIS
The large uptick in economic confidence in the CIS region was largely a result of Ukraine's Economic Confidence Index score, which improved 43 points, and Russia's score, which jumped 35 points. Ukraine's economy receded considerably in 2009, but it experienced growth in 2010 and 2011, though this growth is expected to slow. Russia's economy was also hard hit in 2009, but it experienced growth and reduced debt in the years following the economic fallout.
Economic Confidence Up in Most Latin American Countries
In the Americas, 16 out of the 18 countries surveyed experienced improvements; only El Salvador and Costa Rica saw a decline in economic confidence. Uruguay, Brazil, Ecuador, and Panama led confidence in the region, all with scores in the 30s. Nicaragua, Paraguay, and Peru experienced the largest 2009 to 2012 improvements, all raising their score from negative to positive territory. Countries in the Americas recovered relatively quickly from the global recession and were not as hard hit as those in other regions. Economic growth in the Americas is predicted to outpace the rest of the world in 2013.
Confidence Declines in Many Sub-Saharan Africa and MENA Countries
Countries in sub-Saharan Africa and the MENA region experienced some of the largest declines in economic confidence since 2009. Economic confidence declined more than 100 points in Malawi since 2009 and dropped 86 points in Sudan.
Malawi experienced an economic crisis over the last two years as a result of foreign currency shortages, and residents have faced long lines for gas and other commodities. In 2009, Gallup's interviewing in Sudan included both the northern and southern parts of the country. In 2012, Gallup only interviewed in the northern part of the country, which has faced economic difficulties since the South gained independence. Struggles between the North and the South over oil have hurt the economies of both regions.
In the MENA region, Syria experienced the third largest pullback in confidence in the world, with a 61 point decline. The instability in the country is no doubt eroding economic confidence. Economic confidence in Qatar, at 88 in 2012, is the highest in the region and the world. Qatar weathered the economic crisis relatively unharmed, with gas and oil reserves buffering the country's economy. Qatar's residents also boast the highest per-capita income in the world, all of which likely created an environment for strong confidence in the economy.
For full results for each region, see page 2.
Gallup's Economic Confidence Index is a relative number that largely depends on the economic momentum in a country. If people perceive their economic condition to be deteriorating, scores decline, but if they see improvements made, scores increase. In other words, if a country with a relatively strong economy begins experiencing an economic decline, confidence could drop below the level of confidence in less developed countries.
Confidence in the economy among residents living in Europe is significantly below that of residents living in less economically developed regions, which is a reflection of the ongoing economic turmoil and uncertainty in the region. Other regions, such as the Americas and Asia, did a better job weathering the economic storm and have seen healthy growth in confidence over the past four years.
Residents of a country with high economic confidence perceive the current economy to be strong and are confident the future is getting better. This confidence may increase spending, investment, and bank deposits. On the flip side, countries with little confidence, such as Cyprus, may begin pulling money out of banks or reducing spending, which can exacerbate problems. As the world continues to come out of the global recession, Gallup will continue to monitor global residents' economic confidence.
For complete data sets or custom research from the more than 150 countries Gallup continually surveys, please contact us.
Results are based on face-to-face and telephone interviews with approximately 1,000 adults, aged 15 and older, conducted in 108 countries in 2009 and 2012. Countries were weighted based on the size of their population.
For results based on the total sample of national adults, one can say with 95% confidence that the margin of sampling error is ranges from a low of ±2 percentage points to a high of ±5 percentage points.
For more complete methodology and specific survey dates, please review Gallup's Country Data Set details.