Although 2025 began with fears of an economic slowdown, as the new U.S. trade policies under Donald Trump sparked concerns of a broad recession, the Economist’s annual analysis “Which economy did best” for the global economy predicts GDP growth of around 3% and low unemployment in most developed economies, with the main challenge remaining persistently high inflation.

Indeed, Greece, which led in 2022 and 2023, continues to rank among the top economies this year, just behind Portugal, Ireland, Israel, Colombia, and Spain, while standing on par with the Czech Republic.

Portugal at the Top

For the fifth consecutive year, the magazine compiled a ranking of the “economy of the year,” examining five key indicators: structural inflation, range of price increases, GDP growth, labor market performance, and stock market performance.

At the top of the list for 2025 is Portugal, which combines strong economic growth, mild inflation, and impressive stock market gains. Its performance is largely attributed to a tourism boom and the inflow of affluent foreign residents benefiting from favorable tax policies.

Greece Remains High

Countries in Southern Europe, which were hit hard by the economic crisis of the 2010s, also rank highly. Greece (6th, tied with the Czech Republic), winner in 2022 and 2023, and Spain (4th), significantly improved across all indicators, occupy positions near the top. Second place goes to Ireland, although official data is skewed by the presence of multinational giants.

Southern Europe Stands Out

At the opposite end of the ranking are mainly northern and northeastern European economies. Estonia, Finland, and Slovakia occupy the lowest positions, with low growth and problematic inflation performance. Germany shows slight improvement compared to previous years but remains low, as does the United Kingdom, which continues to face elevated inflation. France, despite political uncertainty, posts a respectable overall performance.

The emerging picture confirms a clear shift of economic dynamism toward Southern Europe, at a time when significant parts of Northern Europe and major economies face persistent structural challenges.

The United States is in the middle of the ranking, as relatively high inflationary pressure reduces its overall score, despite a resilient labor market. In contrast, Israel stands out for its dynamic recovery and exceptional stock market performance, while Denmark records the worst market performance due to the steep drop in Novo Nordisk shares.