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Top 5 Happiest Countries and Their Economic Overviews

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Credit: Photo by Christine Roy on Unsplash

The year 2022 marked the 10th anniversary of the World Happiness Report. Over the last ten years, the report has covered more than 150 countries each year, ranking them based multiple inputs such as life expectancy, generosity, the levels of GDP, social support, freedom, corruption and more.

Are the Happiest Nations the Wealthiest?

Is there a link between the economic prosperity of a nation and the happiness of its people? Here’s an economic overview of the top five countries on the list.

1. Finland

According to the 2022 report, Finland is the happiest country in the world. Finland, a European Union (EU) member since 1995, is classified as a ‘high income’ country by the World Bank. The country “has redefined itself from a quiet agriculture and forestry-based economy to a trend setting global center for technology and design,” reads a report by the International Trade Administration.

With international trade accounting for around 36% of its GDP, Finland is highly integrated into the global economy. Finland’s key export sectors are transportation, electronics, forestry, machinery and chemicals. Its GDP is expected to be around $297.62 billion in 2022 and will be close to $370 billion by 2027 based on current estimates by the IMF. The country’s GDP per capita is around $53,744, which will increase to $66,362 in the next five years. Finland is home to the world’s biggest archipelago. The country has a 75% forest cover and aims to be carbon-neutral by 2035. Finland has its share of concerns too. The Bank of Finland highlights the nation’s aging population among its concerns as it will lower the percentage of working age population while resulting in a sustained increase in public pension and spending on health care and long-term care of the elderly.

2. Denmark

Denmark is a constitutional monarchy and has been a member of the EU since 1973. Denmark’s small, open economy shares border with Germany and is connected by bridge to southern Sweden. The Faroe Islands and Greenland are a part of the Kingdom of Denmark. With around 55% of GDP (as per World Bank data) being accounted by exports, international trade is crucial for the Danish economy.

According to a report by the Ministry of External Affairs, “Export and trade means both higher GNP and a higher employment rate. Danish export supports a wide range of jobs, and the Danish labor market therefore benefits hugely from export.” Denmark’s neighbor Germany is its largest export customer. However, its second largest export destination is the U.S. With a projected GDP size of $399.1 billion for 2022, Denmark is classified as a ‘high income’ economy by the World Bank. In the next five years, the Danish economy is expected to reach a size of $511 billion. Denmark’s per capita GDP of $68,094 is among the top ten in the world. By 2027, its GDP per capita is expected to reach the $85,518 mark.

3. Iceland

Iceland, an island nation in the Atlantic Ocean, is a small, open democracy with abundance of renewable energy. Iceland has the highest share of renewable energy in any national total energy budget; about 85% of the total primary energy supply in Iceland is derived from domestically produced renewable energy sources. Tourism, fishing and aluminum smelting are the key pillars of the Icelandic economy. Its GDP is expected to grow to $27.87 billion in 2022 and would reach $36 billion by 2027 based on current projections by IMF. Its small population gives a boost to its GDP per capita, which is around $74,400 and is expected to grow to $94,020 in the next five years. According to the country’s Tourism Satellite Accounts, tourism as a direct proportion of GDP has averaged around 8-9% in recent years. During 2020, it fell to 3.9% in 2020. Tourism has boosted the country’s exchange rate, and thus been instrumental in improvising its external position. According to Statistics Iceland, in 2021, tourism accounted for 17% of the total value of exports of goods and services (35% before the pandemic), manufacturing products accounted for 32% (mostly aluminum) and marine products were 24% of total exports. 

4. Switzerland

Switzerland, an Alpine nation, is a prosperous country and a modern economy. With a projected GDP size of $841.97 billion in 2022, Switzerland is the 20th largest economy in the world. It is expected to join the trillion-dollar economy club by 2026 according to the IMF. As per current estimates, Switzerland is the fourth richest nation in terms of GDP per capita of $96,390 and will be moving up to the third spot in 2023. Switzerland is one of the highest spenders on research and development (R&D) in the world with more than 3% of its GDP invested in R&D annually. Switzerland's economy is primarily service driven, with financial services (banking and insurance) and tourism as its key areas. The financial sector contributes approximately 10% of Swiss GDP. The country’s political stability as well as an efficient institutional and regulatory environment are a few reasons behind its preferred status as an international financial center. Switzerland has an advanced manufacturing sector. The mechanical engineering, electrical engineering and metalworking (MEM) industry is the core of Swiss Manufacturing. In terms of total trade, Germany is Switzerland’s largest trading partner, followed by the U.S. and China. 

5. The Netherlands

The Netherlands is a geographically small nation that is strategically located from commerce point of view. Netherlands is home to Europe’s largest port and the fourth-largest airport for cargo, and these factors have helped in its rise as a top trading nation. Netherlands became a trillion-dollar economy in 2021 and is currently the 19th largest economy with a GDP size of $1.01 trillion. Netherlands has a thriving service sector and has nine key sectors, such as agri-food, information technology, chemicals, high-tech systems and materials, life sciences and health, creative industries, energy, aerospace and logistics.

The Netherlands aims to have a circular economy by 2050, “a waste-free economy that runs as much as possible on sustainable and renewable raw materials, and in which products and raw materials are reused.” Its per capita GDP is expected to rise to $71,480 by 2027 from the 2022 estimate of $57,835. The Netherlands is a member of the EU since 1958. Intra-EU trade accounts for 66% of Netherlands’ exports and 42% of its imports. Other than EU, the U.S. has emerged as a strong trading partner for the Netherlands.

The other five nations that complete the list of top ten are Luxembourg, Sweden, Norway, Israel and New Zealand.

Disclaimer: The author has no position in any stocks mentioned. Investors should consider the above information not as a de facto recommendation, but as an idea for further consideration. The report has been carefully prepared, and any exclusions or errors in it are totally unintentional. The data is based on multiple reports (links provided) and information based on company websites. The rankings are based on the World Happiness Report.  

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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Prableen Bajpai

Prableen Bajpai is the founder of FinFix Research and Analytics which is an all women financial research and wealth management firm. She holds a bachelor (honours) and master’s degree in economics with a major in econometrics and macroeconomics. Prableen is a Chartered Financial Analyst (CFA, ICFAI) and a CFP®.

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