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Purchasing Power Parity by Country 2023

Purchasing Power Parity (PPP) is a monetary conversion rate used to enable country-to-country comparisons of economic indicators including Gross Domestic Product (GDP), Gross National Income (GNI), GDP per capita, and GNI per capita. Purchasing Power Parity compares the prices of roughly 1,000 common products in each nation (the most famous example being the McDonald's Big Mac), then determines the number by which one country's money would need to be multiplied in order to purchase the same goods and services in another country (usually the US). This number is the country's PPP conversion factor, or exchange rate.

For example, if a Big Mac costs 12.00 in a country's local currency (pesos, rubles, etc.) and $5 in the US, that country's PPP exchange rate is 12/5, or 2.4, which means that a single unit of that country's currency would need to be multiplied by 2.4 to equal one US dollar. An alternate way to express this rate would be that a US dollar is worth 2.4 of that country's currency.

The purpose of the Purchasing Power Parity exchange rate is to convert each country's local currency into a common baseline currency—usually the US dollar or the International dollar, a fictional currency specifically designed for such a purpose. Thus, economic performance can be compared using a single common currency rather than dozens of national currencies whose market exchange rates can change rapidly.

PPP conversion factor is an inverse value, meaning a higher PPP such as Pakistan's (41.95) represents less purchasing power than does a low PPP such as Luxembourg's (0.85). As such, a numerically lower PPP is generally considered preferable. However, PPP by itself offers little insight into a country's economic health and is very rarely considered on its own. Rather, it is most often used as a tool for calculating other economic indicators, such as GDP or GNI.

Top 10 Countries with the Lowest PPP Conversion Factor (Highest Purchasing Power) (2021 INT$):

  1. Kuwait — 0.18
  2. Bahrain — 0.18
  3. Oman — 0.19
  4. Jordan — 0.32
  5. Kosovo — 0.35
  6. Timor-Leste — 0.42 (2019)
  7. Montenegro — 0.42
  8. Panama — 0.46
  9. El Salvador — 0.49
  10. Azerbaijan — 0.51

Top 10 Countries with the Highest PPP Conversion Factor (Lowest Purchasing Power) (2021 INT$):

  1. Iran — 39,001.99
  2. Vietnam — 7,901.71
  3. Somalia — 7,861.36
  4. Indonesia — 5,067.27
  5. Guinea — 4,353.05
  6. Lebanon — 3,546.30
  7. Laos — 3,259.33
  8. Sierra Leone — 3,255.26
  9. Paraguay — 2,617.90
  10. Uzbekistan — 2,317.69

Advantages and disadvantages of Purchasing Power Parity (PPP)

The major advantage PPP holds over the standard market exchange rate is relative stability. While the market exchange rate for currency can be quite volatile, PPP fluctuates much less over time, making it preferable in many cases. PPP also does a better job of accounting for the costs of products and services that are typically not traded internationally, such as concert tickets, a five-mile ride in a taxi, or a wedding planner. These purchases tend to cost less in low-income countries than in high-income countries, and failing to account for them could result in an inaccurate calculation of a country's purchasing power, cost of living, and quality of life.

On the downside, PPP is much more logistically challenging to measure than a simple market-based exchange rate. It also involves a significant amount of educated estimation, especially in the time between price surveys or for countries in which certain prices are unavailable or untracked. As a result, the accuracy of PPP can drift over time, until updated prices are incorporated.

Note:
- Purchasing Power Parity (PPP) values are shown in local currency units per US dollar (OECD) or International dollar (World Bank).
- All data correspond to the year 2021 with the exception of the British Virgin Islands (2017), Cuba (2011), Eritrea (2017), Kuwait (2020), San Marino (2020), Sint Maarten (2018), South Sudan (2015), Turkmenistan (2019), Venezuela (2011), and Yemen (2013).

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Country
PPP (Int$)
PPP (USD)
Iran46,072
Somalia9,320
Vietnam7,451
Indonesia4,7594,759
Guinea4,003
Lebanon3,410
Sierra Leone2,970
Laos2,852
Paraguay2,654
Uzbekistan2,476
Cambodia1,392
Colombia1,3591,352
Uganda1,311
Madagascar1,1921,206
Mongolia1,015
DR Congo974
Tanzania891
South Korea847
Iraq703
Burundi680
Chile430435
Myanmar407
Republic of the Congo357
Costa Rica357342
Rwanda331
Gabon316
Malawi312
Central African Republic278
Equatorial Guinea259
Niger251
Chad243
Ivory Coast242
Senegal236236
Togo231
Cameroon227227
Guinea Bissau219
Mali208
Burkina Faso207
Angola204
Benin200
Comoros185
Armenia160
Hungary155155
Kazakhstan154
Nigeria153
Iceland151150
Vanuatu107
Djibouti104
Japan100102
Yemen94
Guyana87
Zimbabwe86
Jamaica74
Sudan72
Sri Lanka54
Haiti47
Cape Verde46
Kenya44
Albania4343
Argentina4343
Serbia4342
Pakistan42
Algeria41
Nepal34
Bangladesh32
Uruguay30
Russia2727
Mozambique24
Dominican Republic24
India2323
Kyrgyzstan20
Bhutan20
Philippines19
North Macedonia1919
Afghanistan18
Gambia17
Mauritius16
Ethiopia14
Mauritania13
Czech Republic1313
Thailand12
Nicaragua12
Sao Tome and Principe11
Honduras11
Mexico10
Norway1010
Ukraine9
Sweden99
Seychelles8
Maldives8
Namibia7
South Africa77
Solomon Islands7
Denmark77
Lesotho6
Zambia66
Eswatini6
Moldova6
Suriname6
Hong Kong66
Eritrea5
Macau5
Botswana5
Egypt5
Trinidad and Tobago4
China44
Guatemala4
Morocco44
Israel44
Croatia3
South Sudan3
Turkey33
Venezuela3
Bolivia3
Brazil33
Qatar2
Tajikistan2
Ghana2
Papua New Guinea2
Barbados2
United Arab Emirates2
Antigua and Barbuda2
Peru2
Poland22
Saudi Arabia22
Saint Lucia2
Dominica2
Romania22
Saint Kitts and Nevis2
Turkmenistan2
Samoa2
Grenada2
Malaysia2
Saint Vincent and the Grenadines2
New Zealand11
Tonga1
Australia11
Sint Maarten1
Curacao1
Tuvalu1
Belize1
Bermuda1
Canada11
Aruba1
Libya1
Switzerland11
Nauru1
British Virgin Islands1
Turks and Caicos Islands1
United States11
Kiribati1
Micronesia1
Cayman Islands1
Tunisia1
Georgia11
Marshall Islands1
Puerto Rico1
Belarus1
Fiji1
Luxembourg11
Singapore11
Finland11
Bahamas1
Palau1
Ireland11
Netherlands11
Austria11
Germany11
Belgium11
France11
Bulgaria11
United Kingdom11
Bosnia and Herzegovina1
San Marino1
Italy11
Brunei1
Spain11
Cyprus11
Azerbaijan1
Malta11
Portugal11
Slovenia11
Greece11
Estonia11
Slovakia11
Ecuador1
Latvia11
Timor Leste1
El Salvador
Panama
Lithuania
Liberia
Cuba
Jordan
Oman
Bahrain
Kuwait
showing: 197 rows

Which country has the highest purchasing power parity?

At 39,001.99, the country with the Highest PPP, or the lowest purchasing power, is Iran.

Frequently Asked Questions

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