PPP(Purchase power parity)

8/10/2019 PPP(Purchase power parity)

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Ranking of countries based on PPP

Haresh Kumar 131323



What is PPP?

• The purchasing power parity measures the purchasing power of one curragainst another after taking into account their exchange rate.

• Exchange rate means you measure the strength of purchasing power on $Rs50 (suppose) and not with Rs1.

• Ex: A bag in America costs $40, while in India they sell for Rs750.

•

Since $1=Rs50, the bag which costs only $15 if we buy in India.

• Clearly there is an advantage of buying the bag in India, so consumers wouhappier to buy the bag in India.



Top 5 and bottom 5 countries



FACTORS AFFECTING GDP IN US

GDP: $15.6 trillion

The availability of land compared to most other developed countries, thuprice of both real estate and natural resources lower in the US than in tho

A well-developed infrastructure, high productivity, technological developabundant natural resources, Foreign investors.

•

Consumption

• Leader in scientific research and technological innovation

• They have the highest average household and employee income among OE

• In its market oriented economy, companies have flexibility to expand capitdevelop new products. US GDP constitutes 22 per cent of the gross world p

is the largest importer and second largest exporter of goods.



FACTORS AFFECTING GDP IN CHINA

•

GDP: $12.4 trillion• World's largest exporter of goods.

• High productivity, low labour costs and good infrastructure have backed ita global leader in manufacturing.

• In terms of total revenues, three of the world's top ten most valuable comfrom China.

• The number of US dollar billionaires in China has increased from 130 in 22012, making China the home to world's second-highest number of billion

• China is one of the world's top exporters and is attracting record amountsinvestment.

• China is the world's largest car market and the biggest energy consumer. Htransformed itself from impoverished communist state to economic superChina overtook germany four years ago



FACTOR EFFECTING GDP IN INDIA

GDP : $4.8 trillion

India has the world's tenth-largest by nominal GDP and third-purchasing power parity (PPP).

India’s biggest asset is its 487.6-million worker labour force, tsecond-largest, as of 2011.

Government and Indian government market.

Young Population And Corresponding Low Dependency Ratio, HSavings And Investment Rates, And Increasing Integration Into TEconomy, The Outlook For India's Medium-term Growth Is Posit



FACTOR EFFECTING GDP IN JAPAN

• GDP :$4.5trillion.

• It has some of the largest and technologically advanced produvehicles and electronics goods, besides machine tools, steel annonferrous metals, ships, chemical substances, textile manufacompanies.

• With a highly developed industrial base, it is also the world's exporter and fourth-largest importer of goods.

• Government debt and government spending.

• The GDP per Capita, in Japan, when adjusted by Purchasing Pequivalent to 143 percent of the world's average.



FACTOR EFFECTING GDP IN COMOROS

• From 1980 until 2012, Comoros GDP per capita PPP averaged 1189reaching an all time high of 1353.1 USD in December of 1984 and aof 1054.8 USD in December of 2011.

• The total population in Comoros was last recorded at 0.7 million pe2012 from 0.2 million in 1960, changing 279 percent during the las

• Unemployment Rate in Comoros decreased to 13.50 percent in Dec2004 from 20 percent in December of 1996.

• From 2003 until 2012, Comoros Government Budget averaged -1.6GDP reaching an all time high of 3.1 Percent of GDP in December ofrecord low of -3.8 Percent of GDP in December of 2003



FACTOR EFFECTING GDP IN PALAU’S

•

Tourism is Palau’s main industry .• Visitors come from Japan, USA, Taiwan.

• Arrivals from Asia dropped , which made Palau's doldenominated prices more expensive.

• Construction is the most important industrial activit

• Several large infrastructure projects, including the reof the bridge connecting Koror and Babeldaob Islandits collapse in 1996 and the construction of a highwathe rim of Babeldaob, boosted activity at the end of 1



FACTOR EFFECTING GDP IN TUVALU

• Tuvalu is a lower-middle income, very small-sized economy Oceania. Tuvalu has a population of 0.01 million people.

• In 2012 Tuvalu's GDP was USD 0 billion. Tuvalu's GDP grewat 1.20% in 2012. GDP per capita, in purchasing power-adjus

terms, is USD 3,338.

• Tuvalu's total exports in 2005 were USD 0.00 billion while itsimports were USD 0.03 billion.



FACTOR EFFECTING GDP IN SAO TOME APRINCIPE

•

The GDP per Capita, in Sao Tome and Principe, when adjusted by Purchasing Powerto 7 percent of the world's average.

• The total population in Sao Tome and Principe was last recorded at 0.2 million peopmillion in 1960, changing 200 percent during the last 50 years.

• Unemployment Rate in Sao Tome and Principe decreased to 14 percent in Decembepercent in December of 2006.

•

Sao Tome and Principe recorded a trade deficit of 31.92 USD Million in the third quaTome and Principe runs systemic trade deficits due its dependency on imports of fototal imports), fuel (14 percent) and capital equipment. The main export is cocoa (9exports)

• Main trading partner is Portugal (12 percent of exports and 72 percent of imports).

• Government debt as a percent of GDP is used by investors to measure a country abipayments on its debt, thus affecting the country borrowing costs and government b





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PPP(Purchase power parity)