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OPINION
Who wins the 2018 Economic World Cup?
Which country takes the economics spoils? Let the matrix decide
Chief Economist and CIO at Saxo Bank Steen Jakobsen
B
ill Shankly, the legendary Liverpool FC manager, once said: “Some people think football is a matter of life and death. I assure you, it’s much more serious than that.”
I am not one to argue with one of the best, if not the best, football managers ever. This is our attempt to connect the all-important world of football to the comparatively boring one of economics. Like any boy who has played football, I fancy myself as something of a connoisseur, so here is my official call for the 2018 FIFA World Cup: Belgium will be the champions.
Odds-on favourites Brazil and Germany have both lost momentum, and besides, these are the consensus calls. Instead, I will go with a country small in size, but big in terms of its players’ abilities. (The irony of pointing to Belgium and hence Brussels is not lost on me at a time where Europe is about to face a potential existential crisis!)
Here at Saxo Bank, we are both followers of the FIFA World Cup as well as active participants in the financial and economic spheres; we have constructed a matrix of factors which will predict the group stages and the ultimate winner based on the following metrics:
• Misery index: This index combines a country’s inflation with its unemployment (the lower, the better) and its 12-month trailing stock market performance (the stock market is perceived to be a gauge for the overall performance of a country; higher is, of course, better).
• CDS spreads: The “insurance premium” of hedging the downside of an economy measured as a basis-point premium (the higher, the worse).
• Gini-coefficient: This metric measures inequality and the overall equality of a country secures long-term growth. There is also an increasing understanding that education and access to education creates a more productive society (lower is better).
These parameters are equally weighted and then ranked from one to
30: number-one performers thus win their categories, and the overall lowest combined score wins.
So what does our podium look like in the 2018 Economics World Cup?
World champions: Iceland – 6.0 Second place: Denmark – 8.0 Third place: Japan – 7.5
In fourth place we find Germany with a score of 9.5. In fact, South Korea actually ranks higher than Germany with 8.3 , but they lost in the quarter-finals to Japan
with 7.5, while Japan then – despite a higher score than Denmark – failed to win the semi-final versus Iceland, hence the result above. In economics as in football, every match matters!
www.ibsintelligence.com | © IBS Intelligence 2018
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