GROSS DOMESTIC PRODUCT AND ACTUAL INDIVIDUAL CONSUMPTION IN PURCHASING POWER STANDARD, 2020

On 15 December 2021, Eurostat publishes data on gross domestic product (GDP) and actual individual consumption (AIC) per capita for 2020, expressed in the purchasing power standard (PPS).

1) As of 15 February 2019, the Republic of Croatia uses the name Republic of North Macedonia in all forms of public communication.

The Croatian Bureau of Statistics participates in the European comparison programme together with the statistical offices of other European countries with the aim of internationally comparing the volume of all categories of final consumption of GDP of all countries participating in the project.

The most recent analyses of purchasing power parities (PPPs) and related economic indicators (GDP and AIC) per capita are presented for the period 2018 ‒ 2020, focusing on the latest reference year.

The results of the European comparison programme of prices and GDP show that GDP per capita in the Republic of Croatia expressed in the purchasing power standard for 2020 amounted to 64% of the average of 27 EU Member States, while AIC per capita in the same year amounted to 68% of the EU-27 average.

Luxembourg, country with the highest GDP expressed in PPS

Among the EU Member States, the highest GDP per capita in PPS was recorded in Luxembourg and its level is more than two and a half times above the EU-27 average, amounting to 263% of the EU-27 average, while Bulgaria has the lowest GDP level, amounting to 55% of the EU-27 average.

The highest level of GDP per capita in Luxembourg is partly due to the large share of cross-border workers in the total employment. Although cross-border workers contribute to GDP, they are not taken into consideration as part of the resident population that is included in the calculation of GDP per capita.

While GDP per capita is mainly used as an indicator of a country’s level of welfare, it is not the only such indicator. AIC per capita is an alternative indicator better adapted to describe the material welfare situation of households. Generally, it is a more homogeneous category than the level of GDP, but there are still substantial differences across the Member States.

AIC is the lowest in Albania

AIC per capita in PPS among the EU Member States in 2020 ranged from 39% below the EU-27 average in Bulgaria to 45% above the EU-27 average in Luxembourg.

In addition to Luxembourg, the highest AIC per capita in PPS was recorded in Germany, Denmark, the Netherlands, Austria, Belgium, Finland, the United Kingdom and Sweden, ranging between 10% and 24% above the EU-27 average.

These were followed by France, which had AIC per capita in PPS of about 10% above the EU-27 average.

Italy, Cyprus, Lithuania, Ireland, Spain, Portugal, Czech Republic, Poland, Slovenia and Malta constitute a group of countries whose level of AIC per capita was below the EU-27 average, ranging from 4% to 20%.

Romania, Estonia, Greece, and Slovakia were between 20% and 30% below the EU-27 average.

The lowest level of AIC per capita was recorded in the group of countries consisting of Latvia, Hungary, Croatia and Bulgaria, whose average was between 30% and 39% below the EU-27 average.

In addition to 27 EU Member States, the analysis includes three EFTA Member States (Norway, Switzerland and Iceland), the EU Candidate Countries (Turkey, Montenegro, Serbia, North Macedonia¹⁾ and Albania) and a Potential Candidate Country (Bosnia and Herzegovina).

In 2020 in EFTA countries, AIC ranged between 19% and 26% above the EU-27 average, in Candidate Countries it ranged between 32% and 61% below the EU-27 average, while in the Potential Candidate Country it amounted to 58% below the EU-27 average.

1) As of 15 February 2019, the Republic of Croatia uses the name Republic of North Macedonia in all forms of public communication.

1) Countries are ranked according to AIC per capita in 2020. Countries with the same value are ranked by protocol order.
2) As of 1 February 2020, the United Kingdom orderly ceased to be an EU Member State. Therefore, data referring to the United Kingdom are presented separately.
3) As of 15 February 2019, the Republic of Croatia uses the name Republic of North Macedonia in all forms of public communication.

NOTES ON METHODOLOGY

Data sources

The data on PPP, GDP in PPS, volume indices and population figures are published on the Eurostat website under the domain National Accounts (including GDP), collection Annual national accounts, as well as in Eurostat database (Tables by themes, Economy and finance, National accounts (including GDP), Annual national accounts, GDP per capita in PPPs).

Eurostat also publishes PPPs and derived indicators on the website Statistics Explained (Economy and finance, Comparative price levels (PPPs)).

Definitions and explanations

PPPs are indicators of differences in price levels across countries. They indicate how much currency units cost a certain amount of goods and services in different countries. PPPs can be used as currency conversion rates to convert expenditures denominated in national currencies into artificial common currency (PPS), thus eliminating the effect of price differentials in individual countries.

PPS is an artificial reference currency unit that eliminates differences in the price levels among countries. Thus, one PPS buys the same amount of goods and services in all countries. That unit allows a comparison of the volume of economic indicators across countries. Aggregates expressed in PPS are derived by dividing the aggregates in current prices denominated in the national currency by the respective PPP.

PPP and GDP in PPS are the results of a multilateral statistical survey. Its specific feature compared to other statistical surveys is that the results are calculated by the international coordinator. Specifically, none of the participating countries can produce the results independently. The second specific feature is inter-dependency of the results among countries. A change in the data of one country does not influence only the results of this country, but influences, more or less, the results of the other countries as well.

The results are based on the latest GDP data for 2020 and the most recent PPPs available.

PPPs are used to generate the price and volume indices that are needed for economic research and analyses that include the comparisons of GDP and GDP expenditure across countries. Volume indices are used to compare the size of the economy and the level of material well-being of economies, consumption, investment, government spending and overall productivity. Price indices are used to compare price levels, price structures, price convergence and competitiveness.

In addition to research and analysis, PPPs and real expenditures derived from PPPs are used for statistical calculation. International organisations aggregate real GDP and its components across countries to produce totals for groups of countries, such as the European Union or the OECD. International organisations also use country shares in all totals as weights when economic indicators, such as price indices or growth rates, are combined to obtain averages for country groups.

PPPs are also used for administrative purposes. The European Commission uses the PPP when allocating Structural Funds to Member States. Structural funds have been set up to reduce economic disparities between Member States. The main indicator that determines whether a region can apply for funding from the Structural Funds is the regional BPD per capita within the country, which is deflated by the use of PPPs. The International Monetary Fund (IMF) uses the PPPs when deciding on its members' quota. The country's quota determines, among other things, the financial resources that the country is obliged to pay to the IMF.

Geographical information

The European Union (EU-27) includes Belgium, Bulgaria, Denmark, Czech Republic, Germany, Estonia, Ireland, Greece, Spain, France, Croatia, Italy, Cyprus, Latvia, Lithuania, Luxembourg, Hungary, Malta, the Netherlands, Austria, Poland, Portugal, Romania, Slovenia, Slovakia, Finland and Sweden.

The euro area (EA-19) consists of Belgium, Germany, Estonia, Ireland, Greece, Spain, France, Italy, Cyprus, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Austria, Portugal, Slovenia, Slovakia and Finland.

Legal basis

- Regulation (EC) No 1445/2007 of the European Parliament and of the Council of 11 December 2007 establishing common rules for the provision of basic information on Purchasing Power Parities and for their calculation and dissemination

- Commission Regulation (EU) No 2015/1163 of 15 July 2015 implementing Regulation (EC) No 1445/2007 of the European Parliament and of the Council as regards the list of basic headings used for Purchasing Power Parities

 

Abbreviations
EC	European Community
EFTA	European Free Trade Association
EU	European Union
Eurostat	Statistical Office of the European Communities
OECD	Ogranisation for Economic Co-operation and Development

 

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Lidija Brković, Director General

Prepared by:
Suzana Čajkušić and Mirjana Lepušić

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