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 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 the initiative was launched in 1968. It covers 176 participating economies for the reference year 2021. 

The program relies on a partnership of international, regional, sub-regional, and national statistical agencies. This includes the African Development Bank, the Asian Development Bank, the Interstate Statistical Committee of the Commonwealth of Independent States, the United Nations Economic Commission for Latin America and the Caribbean, the United Nations Economic and Social Commission for Western Asia, the Statistical Office of the European Union, and the Organization for Economic Co-operation and Development. Global coordination, methodology development, and governance activities are financed by the International Monetary Fund—through the Global Data Facility—and the World Bank.

“PPPs produced by the ICP provide a powerful lens through which to better understand the global economy,” the ICP’s Governing Board co-chairs, Markus Sovala and Risenga Maluleke, said in a joint statement. “PPP-based metrics show that developing countries play a larger role than other economic output measures may indicate, and they also reveal large differences in per capita expenditures.” Sovala is Director-General of Statistics Finland and Maluleke is Statistician General of Statistics South Africa.

The ICP 2021 results are available through the ICP website and the World Bank’s Databank. The many uses and applications of PPPs and other ICP data are highlighted here.