Interest rates are at their highest levels in decades, while wars are underway in Europe and the Middle East. The global economy however, as noted by The Economist, recorded another strong performance in 2024. According to the IMF, global GDP will grow by 3.2%. Inflation has eased and employment growth remains steady. Stock markets rallied by more than 20% for the second year in a row.

According to data compiled and analyzed by the Economist, the Mediterranean rally has continued for the third consecutive year, with Spain topping this year’s list. OR Greece and Italy, he adds, continue their strong recovery. Ireland, which has attracted many tech companies, and Denmark, home to Novo Nordisk, round out the top five. Meanwhile, northern European heavyweights disappointed, with sluggish performances from Britain and Germany. The duo of Latvia and Estonia are again at the bottom, a position they held in 2022.

This year, global GDP was boosted by a resilient US economy and free-spending consumers. Israel also performed remarkably, according to OECD data, although its strong growth largely reflects a recovery from a major contraction in the last quarter of 2023, when the war with Hamas began. In Spain annual GDP growth is on track to exceed 3%, due to a strong labor market and high levels of immigration.

Elsewhere, growth was not satisfactory. Germany and Italy have been hit by high energy prices and sluggish manufacturing. Japan is expected to grow by just 0.2%, weighed down by weaker tourism and the auto industry. Hungary and Latvia have slipped into recession.

Labor markets remain robust, the agency adds, with unemployment rates near record lows. Southern Europe, which still suffers from high unemployment, has seen marked improvement: unemployment in Greece, Italy and Spain has fallen to its lowest level in more than a decade. Italy has made the most progress, with unemployment down 1.4 percentage points since the start of the year.

As 2025 approaches, the global economy faces new challenges. Almost half the world’s population lives in countries that held elections this year, many of which produced leaders who could be described as “unpredictable”. Trade is threatened, public debt is ballooning and stock markets have little room for error. For now, at least, Spain, Greece and Italy – long undervalued by their northern neighbors – can enjoy their economic recovery. They deserve recognition.