Pakistan among world’s cheapest economies

Published May 2, 2014
A Pakistani laborer unloads bananas from a truck at a wholesale fruit and vegetable market in Islamabad. — File photo/AP
A Pakistani laborer unloads bananas from a truck at a wholesale fruit and vegetable market in Islamabad. — File photo/AP

ISLAMABAD: Major findings of a new World Bank report, comparing the real size of the world economies, have bracketed Pakistan together with the cheapest economies including Egypt, Myanmar, Ethiopia and Laos, showing price level index (PLI) ranging from 35 to 40.

An index of over 100 means that prices on average are higher than the world’s, and less than 100 means prices are lower. According to the 2011 International Comparison Programme, functioning under the control of UN Statistical Commission, 23 economies are showing a PLI of 50 or below. PLI is the ratio of purchasing power parities (PPP) to corresponding exchange rates.

The most expensive economies in GDP terms are Switzerland, Norway, Barmuda, Australia and Denmark, with indices ranging from 210 to 185. The United States is ranked 25th in the world, lower than most other high-income economies, including France, Germany, Japan and the United Kingdom.

The five economies with the highest GDP per capita are Qatar, Macao, Luxembourg, Kuwait, and Brunei. The first two economies have more than $100,000 per capita.

Six of the world’s 12 largest economies are in the middle income category. When combined, the 12 largest economies account for two thirds of the world economy, and 59 per cent of the world population.

The PPP-based world GDP amounts to $90,647 billion, compared to $70,294bn measured by exchange rates.

Middle income economies’ share of global GDP is 48pc when using PPPs and 32pc when using exchange rates.

Low income economies, as a share of world GDP, were more than two times larger based on PPPs than respective exchange rate shares in 2011. Yet, these economies accounted for only 1.5pc of the global economy, but nearly 11pc of the world population.

Roughly 28pc of the world’s population lives in economies with GDP per capita expenditures above the $13,460 world average and 72pc are below that average.

The six largest middle income economies – China, India, Russia, Brazil, Indonesia and Mexico – account for 32.3pc of world GDP, whereas the six largest high income economies – United States, Japan, Germany, France, United Kingdom, and Italy – account for 32.9pc.

Asia and the Pacific region, including China and India, accounts for 30pc of world GDP, Eurostat-OECD 54pc, Latin America (excluding Mexico and Argentina) 5.5pc, Africa and Western Asia about 4.5pc each.

China and India make up two thirds of Asian and the Pacific economy, excluding Japan and South Korea, which are part of the OECD comparison. Russia accounts for more than 70pc of the CIS, and Brazil for 56pc of Latin America. South Africa, Egypt, and Nigeria account for about half of the African economy.

New data showed that the world economy produced goods and services worth over $90 trillion in 2011, and almost half of the world’s total output came from low- and middle-income countries.

The approximate median yearly per capita expenditures for the world – at $10,057 – means that half of the global population has per capita expenditures above that amount and half below.

Eleven economies have more than $50,000 per capita, while they collectively account for less than 0.6pc of the world’s population. The United States has the 12th highest GDP per capita.

China and India account for about 80pc of investment expenditures in the Asia and the Pacific region. Russia accounts for 77pc of CIS, Brazil for 61pc of Latin America and Saudi Arabia for 40pc of Western Asia.

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