Global economic freedom is staging a partial recovery, yet it has not fully regained the ground lost during the pandemic, according to the Fraser Institute's Economic Freedom of the World 2026 report. Released on October 6, 2026, the annual study, based on 2024 data from 165 countries, underscores the lingering effects of policy responses to the COVID-19 crisis.
The report documents that policymakers' emergency measures—ranging from new regulations and trade barriers to increased government spending and money creation—eroded the foundations of economic growth. While some nations have bounced back, the recovery remains uneven, with many countries still below their pre-pandemic scores.
U.S. ranking and tariff impact
The United States ranks fifth globally in the 2026 edition, trailing Hong Kong, Switzerland, Singapore, and New Zealand. The U.K. is 10th, Canada 18th, Germany 19th, and France 39th. At the bottom are Venezuela, Zimbabwe, Sudan, Libya, Myanmar, and Iran.
Notably, the report includes a supplemental analysis using more recent U.S. data, projecting that when 2025 figures are incorporated into next year's edition, American economic freedom will have declined during the first year of President Trump's second term. This projection is directly tied to the tariff regime that dominated policy in 2025 and 2026—a regime that advisors have been navigating since markets reacted sharply to new duties.
Investment implications
For advisors building globally diversified portfolios, the freedom rankings carry practical weight. Research cited by the Fraser Institute shows that per-capita GDP in the most economically free quartile of countries reached $65,596 in 2024—about 6.9 times the $9,552 in the least-free quartile. Extreme poverty, defined as living on less than $4.10 per day, affects 2% of people in the top quartile versus 41% in the bottom. Life expectancy averages 81 years in the freest countries, compared with 67 in the least free.
These correlations matter for long-horizon international allocations. As Dina Ting, CFA, head of global index portfolio management at Franklin Templeton, argued in a July 2026 interview, international equity exposure has shifted from an optional performance trade-off to a risk-management necessity. Diverging policy environments across countries are creating conditions for highly differentiated country-level returns.
The Fraser Institute's methodology scores countries across five dimensions: size of government, legal systems and property rights, sound money, freedom to trade internationally, and regulation burden. Countries that score well consistently attract capital, produce faster growth, and generate stronger long-run equity performance, according to a literature review of more than 720 peer-reviewed academic papers published over 26 years.
Advisor takeaways
The report's forward-looking note on the U.S. sits at the intersection of trade policy and portfolio strategy. Advisors monitoring recession risks and repositioning client allocations amid tariff uncertainty now have a longer-run frame for that analysis. The trade openness pillar is directly affected by tariff escalation, and if the projected decline materializes, the U.S. could slip further in the 2027 rankings—a dynamic worth tracking for country allocation models.
The uneven recovery also complicates the case for broad passive international exposure. Countries that preserved more of their pre-pandemic freedom scores—such as Switzerland, Singapore, and New Zealand—have structural characteristics that support capital efficiency, property rights enforcement, and monetary stability. These traits matter when advisors consider country-specific tilts rather than market-cap-weighted index exposure.
Matthew Mitchell, senior fellow at the Fraser Institute and coauthor of the report, framed the underlying principle plainly: "Where people are free to pursue their own opportunities and make their own economic choices, they lead more prosperous, happier and healthier lives."
