PARIS - The OECD share in world GDP expressed in Purchasing Power Parities (PPPs) stabilised around 50% between 2011 and 2017 (latest benchmark year), according to new data released today by the International Comparison Program (ICP). Similarly, the share of large emerging economies (China, Brazil, India, Indonesia, the Russian Federation and South Africa) also stabilised at around 30% of world GDP.
The United States and China were the world’s largest economies in 2017, each accounting for around 16% of global GDP. The third largest economy was India, with 6.7% of world GDP.
PPPs are the relevant currency conversion rates to make international comparisons of economic activity. Unlike exchange rates, they correct for differences in price levels across countries. As price levels are higher in high-income countries and lower in low-income countries, a comparison based on exchange rates overstates the size of high-income countries and understates the size of low-income countries. For instance, the OECD area accounts for two thirds of world GDP with currency conversions based on exchange rates. Similarly, the share of the United States in world GDP (24.5%) is much higher than the share of China (15.2%) if exchange rates are used.
The 2017 PPPs released today include new information for non-OECD countries as compared to the 2017 PPPs available so far in OECD.Stat and the World Development Indicators, which were necessarily based on extrapolations1 of GDP deflators from the last PPP benchmark year.
Of particular note is that the 2017 benchmark PPP for China is 18% higher than the extrapolated PPP, implying a similar downward change in estimates of China’s GDP on a PPP basis. Estimates based on extrapolation suggested that China had overtaken the United States on a PPP basis in 2014 but the new benchmark estimates reveal a different picture, with both economies of equal size in 2017. This is a reminder that care is needed in comparing extrapolated estimates. In part to address the impact of extrapolated measures, the next ICP round, which is currently in preparation, will be conducted with 2021 as the reference year.
Specific PPPs can also be applied to measures of Actual Individual Consumption2 (AIC) per capita to provide insights on comparisons of material well-being of households across countries.
In the OECD area, the average3 per-capita volume of AIC was 2.75 higher than the world average in 2017. The United States had the highest AIC per capita in large economies, at over four times the world average, and close to eleven times the average in India and seven times the average in China.
The International Comparison Program (ICP) underlying the above results is the largest worldwide statistical partnership. It involves 176 countries as well as regional agencies collecting internationally comparable prices. For all these countries, the ICP provides volume measures of Gross Domestic Product and its components, for example AIC, based on PPPs. The OECD is a partner in the ICP. Together with Eurostat, the OECD calculated 2017 benchmark PPPs for GDP and final consumption for 49 countries. These benchmark PPPs were included in the worldwide ICP comparison.
For the full report with graphics, visit: http://www.oecd.org/sdd/prices-ppp/oecd-share-in-world-gdp-stable-at-around-50-per-cent-in-ppp-terms-in-2017.htm?utm_source=Adestra&utm_medium=email&utm_content=ICP%202017%20-%20Read%20more&utm_campaign=Stats%20Flash%2C%20June%202020&utm_term=sdd