Results from the International Comparison Program’s 2021 cycle are available. They include purchasing power parities (PPPs), price level indexes (PLIs), and PPP-based expenditures for GDP and 44 expenditure components. 1 The results refer to the 176 economies that participated in the cycle and provide an in-depth account of the global economy and the material well-being of populations around the world for the reference year 2021. Revised results for the previous ICP reference year, 2017, and PPPs for six major headings for 2018 to 2020 have also been published. In addition, extrapolated GDP PPPs for 2022 and 2023 are released for the first time, providing a comprehensive and up-to-date view of the global economic landscape. 2
PPPs convert different currencies to a common currency and, in the process of conversion, equalize their purchasing power by controlling for differences in the price levels of goods and services between economies. PPPs allow international comparisons of GDP and its components that avoid the over- or under-estimation of economic output that is inherent in market exchange rate-based comparisons, as the latter do not adjust for price levels. PPP-based estimates are also not affected by fluctuations in market exchange rates. PPPs are calculated by the prices of ICP specified items within a common basket of goods and services and expenditure shares, used as expenditure weights, on groups of items in each of the participating economies.
The ICP is a multi-partner statistical initiative coordinated by the World Bank under the auspices of the United Nations Statistical Commission. The ICP was initiated in 1968 and has been a permanent element of the global statistical programme since 2016, with the 2021 cycle being the tenth comparison conducted. ICP implementation was coordinated by the ICP Global Office at the World Bank, in partnership with 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 Organisation for Economic Co-operation and Development. Global coordination, methodology development, and governance activities were financed by the International Monetary Fund, via Global Data Facility, and the World Bank.
As a global public good, ICP data are used for research and analysis, indicator compilation, policy making, and administrative purposes at the national, bilateral, regional, and global levels. Users of ICP data, and the cross-country comparisons that they enable, include policy makers, multilateral institutions, academia, the media, and the private sector. The breadth and depth of the ICP dataset make it a valuable input to a wide range of themes under the economic, environmental, and social development umbrellas. PPPs are used to establish the international poverty lines and measures of global poverty, which in turn are used by Sustainable Development Goal 1 to monitor progress. Other SDGs focusing on agriculture, health, education, labor, income inequality, and energy and emissions also draw on PPPs to track progress. ICP data are also used in the UN’s Human Development Index and the World Economic Forum’s Global Competitiveness Index. Analyses of economic growth, productivity, trade, government expenditure, investment, health costs, migration, waste, welfare, prices, and the impact of violence are other examples. The 2021 publication Purchasing Power Parities for Policy Making: a Visual Guide to Using Data from the International Comparison Program provides an in-depth look at these and other applications and sets out the recommended uses of the results and their limitations. For more information, visit the International Comparison Program website.
1/ PPPs are statistical estimates and should be treated as approximations of true values, subject to sampling, measurement, and classification errors. They should not be used as indicators of currency under- or overvaluation. ICP Results are based on data supplied by participating economies to the global and regional implementing agencies, and produced in accordance with ICP methodology. Results are not deemed to be national official statistics.
2/ The standard ICP methodology between the two most recent 2017 and 2021 ICP cycles has been maintained. However, in ICP 2021, the Commonwealth of Independent States (CIS) region was linked through the standard global core list approach, unlike in ICP 2017, when the CIS region was linked through the Russian Federation, which participated in both the OECD and CIS comparisons. For ICP 2017, the Russian Federation’s results are based on the OECD comparison, and for ICP 2021, they are based on the CIS comparison. Furthermore, the Asia and Pacific region moved to the standard ICP approach for estimating housing PPPs based on rental and volume data during the ICP 2021 cycle. The standard approach was utilized for the revised ICP 2017 results and ICP 2021 results, both at the regional and global levels, instead of the previously utilized reference volume approach.