Where are the Highest Interest Rates in the World in 2017?

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Two years ago when we first compiled the list of the highest interest rates in the world, the world was stuck in a state of low or negative rates. The situation today is quite different with the US’ Fed hiking and Europe beginning to end the reign of free money. Emerging market economies are being forced to make decisions on whether to raise interest rates to keep up with the US, and choosing between higher growth or higher capital outflows.

So where are the highest interest rates in the world in 2017?

Using data from TradingEconomics, we looked at the highest interest rates in the world using central bank reference rates for ease of comparison. This time we looked at every countries in the world, not just emerging and frontier markets.

The Six Countries With The Highest Interest Rates Worldwide:

Similar to two years ago, there are still 6 countries with bank policy rates above 20%! The composition of countries has changed though:

  1. Argentina (24.75%)
  2. Ghana (23.50%)
  3. Mozambique (23.25%)
  4. Gambia (23.00%)
  5. Malawi (22.00%)
  6. Haiti (20.00%)

Gone from the list are the two highest rates in Eastern Europe (Ukraine and Belarus, both at 14% now), and the list has strong representation from Sub-Saharan Africa now.

Average Interest Rates by Region:

Central Asia, despite a lack of countries over the 20% threshold, is still home to the highest interest rates in the world on average, with Sub-Saharan Africa second and South America third. In Central Asia, Afghanistan and Azerbaijan lead the region with 15% interest rates in both countries.

Average Interest Rate Less Inflation Rate by Region:

High interest rates are attractive, but not if everything is lost to inflation. Inflation rates can be a bit wonky depending on the methods of sampling and basket of goods used, or if the currency or items are controlled. However, it’s still worth having a look at the highest net/real interest rate by region in the world:

Central Asia still looks very strong from this perspective, with interest rates far outpacing inflation. The main reason for this is to protect local currencies from capital outflows. However, the rest of the world still has net/real interest rates near the zero bound, with Europe, the Middle East/North Africa, and South America all negative. This implies that central banks globally are behind the curve in terms of interest rate cycles, and might want to adapt a more hawkish stance in the future, especially with the US already leading the way.

The Venezuela Exception

We had to omit one country from our data due to extreme numbers, and that country was Venezuela. This is because it is currently suffering from hyperinflation with prices rising 741% over the past 12 months according to opposition political parties’ own research. This skews the graph massively, so we have omitted them. The lesson here is if you are looking for a place with high interest rates to put some money to work, avoid countries with hyperinflation. You can thank us later.

Fifteen Highest Interest Rates After Inflation By Country:

Here are the top 15 high yield countries after inflation is taken into consideration:

Country Name Region  Interest Rate (%) Inflation (%) Difference
Gambia Sub-Saharan Africa            23.00          7.43          15.57
Seychelles Sub-Saharan Africa            12.38       (0.60)          12.98
Mongolia Central Asia            14.00          2.10          11.90
Afghanistan Central Asia            15.00          4.10          10.90
Zimbabwe Sub-Saharan Africa            10.68          0.06          10.62
Ghana Sub-Saharan Africa            23.50        13.20          10.30
Djibouti Sub-Saharan Africa            11.60          2.40            9.20
Cape Verde Sub-Saharan Africa              7.50       (1.30)            8.80
Brazil South America            12.25          4.76            7.49
Iran Middle East / North Africa            18.00        10.60            7.40
Zambia Sub-Saharan Africa            14.00          6.70            7.30
Ecuador South America              8.25          0.96            7.29
Tajikistan Central Asia            12.50          5.30            7.20
Belarus Europe            14.00          7.00            7.00
Chad Sub-Saharan Africa              2.45       (4.40)            6.85

 

Over half the list consists of countries from Sub-Saharan Africa, although some of the inflation rates (such as in Zimbabwe) are artificially low given controls or use of foreign currencies. Brazil stands out as the most developed country on the list, and as a stand-out in a region where most countries have negative net/real interest rates.

 

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