Global economic freedom edges up, but pandemic damage lingers

Global economic openness is mounting a partial recovery but it still hasn't recovered the ground lost during the pandemic, a new report from the Fraser Institute finds, raising pointed questions for advisors overseeing internationally diversified portfolios.

The Economic Freedom of the World 2026 annual report, released October 6, 2026, by the Fraser Institute, a Canadian public policy research organization based in Vancouver, draws on 2024 data; the most recent year for which statistics can be compiled across all 165 countries ranked.

The findings confirm a pattern that market-watchers have tracked since 2020: policymakers, responding to the pandemic emergency with regulation, trade barriers, higher spending, and money creation, inflicted damage on the conditions that underpin economic growth and the recovery has been uneven.

"Global economic freedom fell during the pandemic as policymakers imposed new regulations, raised barriers to trade, increased government spending and taxes, and then printed money to pay for spending," said Matthew Mitchell, a senior fellow at the Fraser Institute and a coauthor of the report.

Where the US stands

The United States ranked fifth globally in the 2026 edition, below Hong Kong (first), Switzerland (second), Singapore (third), and New Zealand (fourth). The United Kingdom came in 10th, Canada 18th, Germany 19th, and France 39th. At the bottom of the 165-country list sat Venezuela, Zimbabwe, Sudan, Libya, Myanmar, and Iran, among others.

The US ranking carries a significant qualifier. The 2026 report includes a supplemental analysis using more current US data and projects that when 2025 figures are formally incorporated into next year's edition, American economic freedom will have fallen during the first year of President Trump's second term. That forward-looking signal is a direct consequence of the tariff regime that dominated policy in 2025 and 2026 - the same regime advisors have been navigating on behalf of their clients since markets reacted sharply to new duties early in 2026.

The investment case for freedom

For financial advisors constructing globally diversified portfolios, the annual freedom rankings carry practical implications. Research cited by the Fraser Institute finds that per-person GDP in the most economically free quartile of countries reached $65,596 in 2024 - approximately 6.9 times the $9,552 recorded in the least-free quartile.

Extreme poverty, defined as living on less than $4.10 per day, affected 2 percent of people in the top freedom quartile, compared with 41 percent in the bottom. Life expectancy in the freest countries averaged 81 years, versus 67 in the least free.

Those correlations matter for advisors building long-horizon international allocations. As Franklin Templeton's head of global index portfolio management, Dina Ting, CFA, argued in a July 2026 InvestmentNews interview, international equity exposure has shifted from an optional performance trade-off to a risk-management necessity and diverging policy environments across countries are creating conditions for highly differentiated country-level returns.

Economic freedom captures exactly the factors that drive those divergences. The Fraser Institute's methodology scores countries across five dimensions: the size of government, the strength of legal systems and property rights, sound money, freedom to trade internationally, and the burden of regulation.

Countries that score well across those dimensions consistently attract capital, produce faster growth, and generate stronger long-run equity performance, according to the report's literature review, which surveyed more than 720 peer-reviewed academic papers published over 26 years.

What the Trump projection means for advisors

The report's forward-looking note on the United States - projecting a freedom score decline tied to the first year of the Trump administration's second term - sits at the intersection of trade policy and portfolio strategy. Advisors who have been monitoring recession risks and repositioning client allocations amid tariff uncertainty now have a longer-run frame for that analysis.

The Fraser Institute's measure of trade openness is one of the five pillars of its freedom score. Tariff escalation drags directly on that pillar. If the projected decline materializes in next year's data, the US could slip further down the rankings in the 2027 edition - a dynamic worth tracking for advisors whose country allocation models incorporate freedom scores.

The uneven pace of global recovery documented in the 2026 report also complicates the case for broad passive international exposure. Countries that sustained more of their pre-pandemic freedom scores - including Switzerland, Singapore, and New Zealand, all ranked in the top five - have structural characteristics that tend to support capital efficiency, property rights enforcement, and monetary stability. Those traits matter when advisors are making the case for country-specific tilts rather than market-cap-weighted international index exposure.

Mitchell framed the underlying principle plainly in the report: "Where people are free to pursue their own opportunities and make their own economic choices, they lead more prosperous, happier and healthier lives."

For advisors assessing the global landscape, the 2026 report is a reminder that the pre-pandemic progress in economic freedom was not permanent and that regaining it, in any jurisdiction, remains the prerequisite for the kind of long-run growth that investment portfolios depend on.