China, India buying power less than estimated: World Bank
Tuesday, 18 December 2007, 20:30 IST
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Washington: The economies of China and India are much smaller than previously estimated when measured by buying power in dollars, the World Bank has said. The preliminary global report on "purchasing power parity" (PPP) provides estimates of internationally comparable price levels and the relative purchasing power of currencies for 146 economies, said a World Bank statement released Monday. China participated in the survey programme for the first time, and India for the first time since 1985. The new results are statistically more reliable estimates of the size and price levels of both economies, according to the bank. Under the old calculation, China had a GDP of $8.8 trillion in 2005, about 15 percent of global GDP of $59 trillion, while according to the new measure, China's economy shrank by 40 percent to $5.3 trillion, which is about 10 percent of global GDP of $55 trillion. India's share of the world economy based on PPP dropped to 4.3 percent from a pervious estimate of 6 percent. Overall, the latest results show that the size of the world economy measured in PPP terms is smaller than previous estimates. The Asian and African economies are one-third and one-fourth smaller, respectively. However, Asia accounts for more than 20 percent of the world's output.In the study, the US has the world's biggest economy with 23 percent of global output. That compares with 29 percent when measured using market rates. The most expensive economies are Iceland, Denmark, Switzerland, Norway, and Ireland with the Price Level Index (PLI) ranging from 154 to 127. The US ranked 20th in the world, lower than most other high-income economies, including France, Germany, Japan and Britain, according to the report. The PLI shows which economies are the most and which are the least expensive. It corresponds to travelers' experience of making purchases after converting their currency at market exchange rates. An index higher than 100 means prices are higher on average than in the US, and one less than 100 means prices are relatively low. The cheapest economies in the world are Tajikistan, followed by Ethiopia, Gambia, Kyrgyzstan and Bolivia, the report added.
Source: IANS
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