Czech Republic rated more stable than US, UK in new Social Risk Index

The Czech Republic has been ranked 19th in the world in the latest 2021 Social Risk Index, which measures political and economic stability and risk factors for social issues in countries across the world. Nordic countries topped the list for the second year running.

Insurance giant Euler Hermes created the Social Risk Index in 2020 at the beginning of the Covid-19 pandemic as a way of measuring business climates across the world during one of the worst recessions since WWII.

In the first edition of the Index, the Czech Republic rated 28, below countries like the United States (23) and United Kingdom (25). Despite ongoing effects of the Covid-19 pandemic, the Czech Republic shot up nine places in this year's Index, passing the US (now 35) and UK (22) in the process.

Czech response to the Covid-19 pandemic was perceived to be one of the reasons for the jump in this year's rankings. Stability in the Czech labor market despite the impact of the pandemic was also highlighted.

"The Czech Republic was helped in the overall Social Risk Index rankings by a relatively high fiscal response to the coronavirus pandemic, approximately 25 percent of GDP," Iva Palusková, a spokesperson for Euler Hermes Czech Republic, told local media.

The Social Risk Index uses twelve factors which are readily available for most countries to determine its rankings. Each country is assigned a score on a scale from 1-100 for each of the factors, which are then combined into an overall score.

The twelve factors include trends in real GDP per capita growth, labor force participation, income inequality, public social spending (on education, health and social protection), political stability, government effectiveness, corruption perception, trust in government, levels of vulnerable employment, imports as percentage of GDP, currency depreciation, and fiscal revenue as percentage of GDP.

The aim of the Social Risk Index is to identify identify potential economic and political instability in countries around the world in a time when change is rapidly occurring. The analysis included 185 countries in 2021.

As in many of these comparisons, Nordic countries topped the list, with Denmark coming in first, followed by Norway and Sweden. Switzerland came in fourth, followed by Finland to round out the top five.

Czech neighbors Germany and Austria ranked seventh and eighth, respectively, while Slovakia came in at 26 and Poland at 41.

Among advanced economies, most countries saw improvements over the past year, though the United States, France, Portugal, and Greece saw large declines in their Social Risk Index scores from 2020 to 2021.

Among emerging economies, the Czech Republic reported one of the largest jumps in the rankings. Estonia (16) and Slovenia (20) were the only other emerging economies to crack the top 20.

You can read more insight about the Social Risk Index, and the methodology used to determine the rankings, from Euler Hermes.