Boom with a view: our economy of the year

0:00With no fees or minimums on checking accounts, it's no wonder the Capital One Bank Guy is so passionate about banking with Capital One. If he were here, he wouldn't just tell you about no fees or minimums. He'd also talk about how most Capital One cafes are open seven days a week to assist with your banking needs. Yep, even on weekends, it's pretty much all he talks about. In a good way. What's in your wallet? Terms apply. See CapitalOne.com slash bank. Capital One N.A. member FDIC. Every idea starts with a problem. Morby Parker's was simple. Glasses are too expensive. So they set out to change that.

0:37By designing glasses in-house and selling directly to customers, they're able to offer prescription eyewear that's expertly crafted and unexpectedly affordable. Warby Parker glasses are made from premium materials like impact-resistant polycarbonate and custom acetate. And they start at just$95, including prescription lenses. Get glasses made from the good stuff. Stop by a Warby Parker store near you.

1:05The Economist

1:13Hello and welcome to The Intelligence from The Economist. I'm Jason Palmer. Every weekday, we provide a fresh perspective on the events shaping your world.

1:27In India, the bottom rung of the caste system is occupied by the Dalits, once called untouchables, who make up perhaps a quarter of the country. Our correspondent says their exceptionally rich cuisine is woefully overlooked.

1:43And we take a ride on the River Thames with a bunch of other commuters. The number of people moving around by river taxi is breaking Victorian-era records, and it's even becoming a slightly more environmentally sound way to get around.

2:05First up, though.

2:13I know what you're thinking. That overall, the world economy did okay in 2025, especially given all those tariff-driven recession fears. You're thinking labor markets are pretty healthy, and stock market returns have been pretty good. But you know that average picture hides a lot of variation, and that some countries have had a far better 2025 than others. If only there were a way, you lament, to rank which countries did best. Well, fear not. Our senior economics writer, Callum Williams, is here to help.

2:51Our economy of the year ranking is composed of five different indicators. that's inflation, inflation breadth, GDP growth, employment growth, and share price growth. And what we do is we look at each of those indicators for as many different rich countries as we can find. And then we rank them all together. And we combine the rankings for each indicator. And so it produces a final score. And we use that to rank countries from best to worst. Inflation I get. What's inflation breadth? It's a bit more complicated. Inflation is an average measure. Inflation breadth is the share of goods and services in the inflation basket that are rising by more than 2 % a year.

3:32Okay, so before we pick apart the different factors, let's just get right to the money shot here. What is the best performing economy of 2025?

3:43It is Portugal, with Ireland very close behind, but Portugal is the winner. Okay, why? A few reasons. Tourism's doing very well. You've had a lot of people moving there from abroad to take advantage of favourable tax regimes. The country also continues to bounce back from the pretty big recession that happened in 2008. Inflation's been kept under control. The stock market is doing pretty well. So it's been an overall very successful year for Portugal. What's interesting is that this is actually the fourth year running in our ranking where a country in Southern Europe has come top. So last year it was Spain.

4:21The two years before that, it was Greece. So this is a very good period for Southern Europe after what was 15 years of very, very poor economic performance. Okay, so we've got the top out of the way. Let's talk about who's further down the league table. Who's had a bad 2025? Okay, so right at the bottom we have Estonia, Finland, and Slovakia. There's a few other countries that didn't do quite so well. Britain is towards the bottom, although not quite as bad as the Slovaks. Germany doesn't do very well, although it does do a bit better than it did last year. And then in the middle, there are some surprises.

4:56You might think that America would be quite high up the rankings. In fact, it's middle of the road. And ditto with Italy. Canada's the best performing G7 economy. Is there anything that ties together the countries that are towards the bottom? Yes. I think if you had to isolate one factor, it would be the energy price shock of 2022. After Russia invaded Ukraine, energy prices went through the roof. And what you can see is that countries that were highly exposed to Russian gas and Russian gas prices, those were the ones that have done badly now for quite a few years. So Estonia and Finland were again towards the bottom of our ranking in previous years, British energy prices went sort of parabolic at one stage.

5:40So yes, if I had to identify one factor, it would be that. And coming to the factors individually, give us a picture that this study reveals on inflation. So what we say in this exercise is the closer a country's inflation is to 2%, the better. On that measure, Turkey does terribly, as anyone who follows Turkish news will know. inflation remains very high there although it has come down quite a lot in recent months. Estonia is still doing badly. I think this is in part to do with the energy price shock of 2022 but there are actually quite a few other countries that are quite a long way from having inflation under control.

6:15So Britain is one example there. Inflation is kind of edging back up and the same is true of America partly to do with fiscal policy perhaps and partly to do with the effect of tariffs. after three years of inflation that was really high, it's reasonable to think that 0 % inflation, which is what Sweden is kind of dealing with at the moment, is great because prices don't rise at all. So a lot of people would think that was a perfect outcome. The issue is, and this is where economists start to worry, is that when you have 0 % inflation, you're very close to having negative inflation. And when you have negative inflation, that introduces all sorts of problems into an economy.

6:54So people start to hold back on spending because they think prices are going to come down. The real value of debt starts to go up. So that makes it more difficult to be paid debt. So you really don't want to have deflation. So actually, 0 % inflation is not a great thing. And taking in other indicators, growth, jobs? Well, growth has been pretty good in Ireland, pretty good in Portugal, indeed, pretty good across Southern Europe. It's been pretty good in Greece as well. And then employment, We're a long way from the glory days of 2021 and early 2022, where there was this recovery from the pandemic and there was a very, very strong employment growth across the rich world.

7:30There are only still, though, a few countries or really a handful of countries where employment is actually negative, where growth is negative. So on the labor market front, it's still pretty positive everywhere. Frankly, unemployment is low and jobs are still being created. Is that to say that essentially you get the same ranking if you took those factors out of your equations? I think that's probably right. There is a big difference between the job growth, say, of somewhere like Ireland, which did create quite a few jobs in 2025, and somewhere like South Korea, where job growth is negative. When you have negative job growth, then it can quite quickly spiral into a situation where the unemployment rate starts to rise quite sharply.

8:12People get nervous and start cutting back expenditure. So in a sense, the differences may seem trivial, but when you're worried about tipping points and the possibility of recession, then it does become a little bit more important. And last one, then global stock markets. How was 2025 and who did well out of it? Well, this was the most surprising one for me because the American stock market gets obviously a lot of attention, the most attention by far. It's had a good year. You might think it's had the best year of any country, but that is very far from the truth. There are many stock markets that have had a much better year than the American stock market.

8:47Israel stock market has done the best. There are some stock markets that have done really badly this year. The worst performer is Denmark. And that is at least partly due to the fact that the biggest company in Denmark, Novo Nordisk, which manufactures a lot of weight loss drugs, had an amazing 2023. But the share price has come right back down this year to really where it was before the whole Ozempic stuff began. So as a result, it's dragged down the overall Danish index. And presumably as occupier of top of the table, Portugal did pretty well too. Yes, very respectively, rose by more than 20%.

9:24And there's something interesting here. We went back and looked at what happened to the stock market of the country that we nominated economy of the year in the following year. And on average, the stock market rises by about 20%. So we are not offering any investment recommendations, but it's worth thinking about. So that is to say then that you reckon those close to the top of the table in 2025 have a good shot for 2026. That definitely is the lesson of our exercise over five years so far. Thanks very much for your time, Callum. Thanks for having me, Jason.

10:08with no fees or minimums on checking accounts. It's no wonder the Capital One bank guy is so passionate about banking with Capital One. If he were here, he wouldn't just tell you about no fees or minimums. He'd also talk about how most Capital One cafes are open seven days a week to to assist with your banking needs. Yep, even on weekends, it's pretty much all he talks about, in a good way. What's in your wallet? Terms apply. See CapitalOne.com slash bank. Capital One N.A. member FDIC. There's one place for the newest drops in wellness and performance and the biggest sale of the year. It's The Drop by GNC, curating the best of what's new, handpicked by the pros who know what works.

10:50And right now, get it all, buy one, get one 50 % off during the semi-annual LiveWell sale. From crushing workouts to leveling up your nutrition and everything in between, get the best deals on the latest innovations. All the newness is all on sale right now during the LiveWell sale on The Drop by GNC.

11:18When most people think about Indian food, they think about butter chicken, paneer tikka masala, naan, which are all tasty. But there's this whole other set of Indian cuisine that a lot of people may not have heard of. And this is called Dalit cuisine. Shailesh Chitnis is our global business writer. Dalits, for those who may not know, are what is one considered, quote-unquote, untouchables in India. These are the lower caste that were shunned from society. And they essentially have a form of cooking that is very different. It uses ingredients in very different ways to come up with dishes that, frankly, even most Indians may not know about.

11:56And it's quite tasty, in my opinion. I've eaten those dishes. And so I would say it's probably one of Indian food's best kept secrets.

12:09A lot of these dishes are cooked in villages. And the reason I mention villages, which is separate from cities, is in cities you'll have people with regular kitchens, gas stoves, things like that. whereas in villages people do still tend to in India cook on fire stoves which would be outside or inside the house.

12:27And so what you're hearing is actually sounds of a kitchen that is in a village where this food is being prepared. A group of women sitting around a fire stove. They're chopping onions, vegetables with their hands and then they mix that frequently with either meat or vegetables.

12:48I was actually introduced to this particular genre of cooking by a book by this author called Shahu Patule. He wrote a book in Marathi, which is a local language in Western India, in sometime around 2014, where he started talking about this kind of food. And really, it was the first time when somebody had actually put these dishes on paper. Now, what is interesting is, even after the book was published, it was not really very popular. Only when the book was translated from Marathi into English in 2020, did more Indians start to realize there is something like this that exists. So I got in touch with Mr.

13:20Patole and a lot of what I've learned was based on my conversations with him and he was really kind enough to actually take the time to go through his village to cook these dishes to show how it is prepared. Now the dishes Mr. Patole cooked for us were quite interesting. There was blood pudding, there was mutton and intestine, there was roasted lung and wild green curry. And so the sounds that you hear are exactly how it is prepared.

13:48Traditionally, these villages would not have access to the best cuts of meat, for example, chicken or goat.

13:58And so what they had to do is they would resort to, for example, eating cow meat. Now, in India, that's a very sensitive topic because cow is considered very holy in certain sections of Hindu society. Now, this food is very different, And the reason that is so is because of the history. Certain upper caste Hindus felt that the Dalits touch was polluting. And that essentially created this whole culture of a hierarchical society wherein villages, Dalits and other lower castes were essentially staying outside the boundaries of the village. Their houses were outside. And even the food that they ate essentially was segregated from a lot of what the upper caste Hindus would eat.

14:36After independence, discrimination on the basis of caste was outlawed. But again, that's law versus in society and that's not really kept pace. And Dalits constitute between a fifth and a quarter of India's 1.4 billion people. So this is not a small number of people we're talking about. This is a huge community and their food has gone unnoticed until now. This cuisine evolved from scarcity, them not getting access to different resources. And so what would happen is anytime a farmer's car would die, they would then look to people from these Dalit communities to take the carcass away and dispose it off for leather making or bones or whatever it is.

15:14And in the process, people in this community would then use the meat from the cow or the buffalo, whatever the case may be, to then cook their own food. That again added to this feeling of segregation or their food being somehow lower or inferior to what upper caste Hindus may eat.

15:33And so I had a very good conversation with Mr. Patole where we talked about this and he explained some of the issues not just in terms of history, but even today that he faces when he goes out and talks about these dishes and what it represents and means to his community.

15:49Surprisingly, he said that people from his community were actually initially angry with him. And the reason for that was they pointed to him saying that you're actually drawing attention to a kind of cuisine that we don't want attention to be drawn to. People may look down upon us, which, frankly, he found quite surprising because, in his opinion, this is what we eat and it should be celebrated. We should not be ashamed about it. So that was the first reaction. But gradually, he also started to see a lot of the young people from his community wanted to connect with that food and wanted to learn more about it.

16:22He had an interesting story where he tried to talk about this in the early 90s by publishing some of these recipes with local Indian newspapers. And when he sent these recipes in where they would have a section for local recipes, they just politely declined and sent it back saying we're unable to publish it. And so for almost 20 years, he didn't do anything about it. And then I think once he retired, he decided to actually just write a book himself.

16:47And while a lot of things have improved since independence and even probably since 1990, food is still a very political issue in India, particularly meat. And a lot of it has to do with the rise of the BJP, which is the current ruling government and their right-wing agenda, as I would call it, where it's kind of a return to Hindu nationalism as they perceive it. And that is tied to this notion of vegetarianism. So being a good Hindu means you're a vegetarian. And if you eat meat, particularly the quote-unquote bad kind of meat, you're not a good Hindu. It's not just an armchair discussion. it has real repercussions to people on the ground in terms of what they can eat.

17:24And it's important to remember that per calorie, in reality in India, cow meat or buffalo meat is the cheapest source of calories that you can find. And so when you're cutting off access to that, you're also cutting off access to important source of calorie to a lot of section of people who cannot afford that. For me personally, it has been quite a journey to learn about this cuisine and I'll tell you why. I grew up in India. I grew up all in many different cities in India, but I never knew about this cuisine. And so to me, it was almost like a little bit, I felt a sense of shame where I just didn't know this entire strand of cuisine that was there.

17:55And so hopefully now more people can know about it. We can celebrate it and we can bring it into regular cuisine. If you go out to a restaurant, we should be able to have these meals as well. And so that's my hope is more people start to have a conversation around this.

18:26All right, we are at Canary Wharf Pier in central east-ish London. I'm with Charlotte Kilpatrick. We are about to get on a Uber boat by Thames Clippers. We're going through the center of town on a boat. On a boat. There we are.

18:47There's a bar. You could have a pastry. You could have a beer. You could have coffee. You could have a little bag of nuts. How about a tea? This is a safety announcement. Oh, good. Please take a moment to read and familiarize yourself with the safety cards in the seat back pockets. Back in the Tudor times, this river was really clogged. So Henry VIII stepped in and introduced fair journeys along the river and regulated who was allowed to operate the boats, which created the Guild of the Watermen.