Hong Kong follows Luanda as the second most expensive city, a reflection of the relative resilience of its local currency, the Hong Kong dollar, which is pegged to the greenback.
Zurich, Singapore and Geneva ranked third, fourth and fifth respectively. Rounding out the top 10 were Shanghai, Beijing, Seoul, Bern and N'Djamena, the capital of Chad.
Mercer's survey ranks 207 cities across five continents and compares the cost of over 200 items in each location, including housing, transport, food, clothing, household goods, and entertainment in U.S. dollar terms. It is used to help multinational companies and governments determine compensation allowances for their expat employees.
This year's survey found instability in housing markets and inflation for goods and services were among the biggest swing factors in the cost of doing business in a global environment.
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The $6,800 monthly cost of renting a two-bedroom unfurnished apartment "of international standards in an appropriate neighborhood" in Luanda compared to $5,500 in New York and $4,899 in London – the world's financial capitals, which placed 16th and 12th in the rankings respectively.
European cities slide down; U.S. cities climb up
While Europe featured prominently in the top 10, many Western European cities in fact dropped in rankings due to the euro's weakening against the U.S. dollar. Paris and Milan, for example, slipped 19 and 23 spots down the ranking to 46th and 53rd place.
"European currencies have weakened against the U.S. dollar which pushed most Western European cities down in the ranking," Mercer said. "Additionally, other factors like the euro zone's economy, falling interest rates, and increasing unemployment have impacted these cities."
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The opposite was the case for American cities, which climbed dramatically in the rankings, reflecting the greenback's swift appreciation.
While New York, the highest-ranked U.S. city, remained stable in the rankings this year, cities on the West Coast, including Los Angeles and Seattle climbed 26 and 47 places respectively, to the 36th and 106th spots. Portland and Winston-Salem were the least expensive cities in the U.S. surveyed for expatriates, ranking in 135th and 157th place.