New purchasing power parities (PPPs), which provide a standardized way to assess the relative buying power of different economies, were released today by the International Comparison Program (ICP) for the reference year 2021.
PPPs adjust for price-level differences across economies, enabling comparison of key metrics such as gross domestic product (GDP) and material well-being. Because price levels tend to be higher in high-income countries and lower in low-income countries, GDP comparisons based on exchange rates—which do not account for price-level differences—overstate the economic size of high-income countries while understating the economic size of low-income countries. PPP-based metrics also have the advantage of avoiding market exchange-rate fluctuations.
The latest ICP data show that the size of the global economy in PPP terms in 2021 was $152 trillion. Middle-income economies accounted for more than half of the total. High-income economies accounted for slightly less than half. Low-income economies constituted barely 1% of global GDP.
“The completion of the latest ICP cycle is a testament to the resilience of national and regional statistical agencies that worked tirelessly to overcome the challenges imposed by the COVID-19 pandemic and to ensure the success of ICP activities,” said Haishan Fu, the World Bank Group’s Chief Statistician. “As a result, the ICP partnership has delivered an important global public good—vital economic statistics that support critical policy analysis to advance economic development.”
The ICP is one of the world’s largest statistical initiatives, coordinated by the World Bank under the auspices of the United Nations Statistical Commission. ICP 2021 marks the tenth comparison completed since its launch in 1968. It covers 176 participating economies for 2021.
The program relies on a partnership among international, regional, sub-regional, and national statistical agencies. This includes organizations such as: African Development Bank; Asian Development Bank; Interstate Statistical Committee of Commonwealth Independent States; United Nations Economic Commission for Latin America and Caribbean; United Nations Economic and Social Commission for Western Asia; Statistical Office European Union; Organization Economic Co-operation Development. Global coordination, methodology development, governance activities are financed by International Monetary Fund through Global Data Facility World Bank.
“PPPs produced by ICP provide powerful lens better understand global economy,” said Markus Sovala Risenga Maluleke joint statement Governing Board co-chairs Director-General Statistics Finland Statistician General Statistics South Africa respectively. “PPP-based metrics show developing countries play larger role other economic output measures may indicate reveal large differences per capita expenditures.”
The ICP 2021 results are available through both its website and World Bank’s Databank.