Saudi Press

Saudi Arabia and the world
Monday, Jun 02, 2025

When people in the richest economies aren’t so well off, something’s amiss

When people in the richest economies aren’t so well off, something’s amiss

The latest World Bank research highlights the inadequacy of GDP to assess wealth, compared with the money in people’s pockets. If environmental factors and the impact of inequality were included, the top 10 list might look different.
Let me pose a trivia question for today: what are the world’s 10 richest economies, on a per capita basis? I imagine most of your guesses would include the United States, Germany and Japan, and on all three counts you would be wrong.

According to the World Bank’s just-published report by the International Comparison Programme (ICP), which every five years or so takes a microscope to 176 countries worldwide, the list is headed by Luxembourg, which in 2017 (the most recent comparison year) boasted GDP per capita of almost US$113,000.

Qatar and Singapore follow, with just over US$90,000, then Ireland, Bermuda, the Caymans, Switzerland, the United Arab Emirates, Norway and Brunei.

Bundling them all together, the 10 richest economies in the world account for a total of just under 38 million people – barely half a per cent of the world’s 7.8 billion population.

The list also calls for extreme caution in trying to use gross domestic product to assess a country’s wealth, compared with the money that sits in people’s pockets. As Princeton economist Angus Deaton notes: “Whatever this list tells us, it is hardly an exact list of countries where people enjoy the world’s highest material living standards.”

Almost all are investment hubs or natural resource exporters in which only a tiny proportion of the population reap the kind of rewards that might justify high affluence ratings. Deaton reminds us that “at any given moment, GDP per capita includes amounts that are not part of people’s current well-being”. The average Irish citizen might say “Yea” to that.

But I am not here to beat up on statisticians and statistics, or to call for the abolition of GDP numbers – whatever their limitations as a guide to our economic progress or our success in eradicating poverty.

Instead, I am enthused by the massive and largely unnoticed bean-counting exercise involved in the International Comparison Programme, and its value in drawing attention to the persistent misuse of GDP.

This is not just because the World Bank’s ICP team leads efforts to recognise the differences between simple exchange rate measures of GDP, and how this equates to our purchasing power (GDP on the basis of purchasing power parity or PPP) as it is influenced by inflation and currency shifts – though these differences amount to a lot.

For example, in PPP terms, the global economy at the end of 2017 stood at around US$120 trillion – compared with GDP measured by current exchange rates at around US$80 trillion. And if you look at the world’s two leading economies, the differences are stark. On an exchange rate basis, at the end of 2019 China’s GDP was $14.34 trillion – just 67 per cent of the US’ US$21.37 trillion. But on a PPP basis, the ICP tells us both China and the US were at the end of 2017 on a par at just under US$20 trillion.

The ICP’s exercise is also valuable because it tries very hard to get closer to measures of livelihoods in each of our economies, by measuring what it calls “actual individual consumption” (AIC). This is of particular interest to us in Hong Kong because this measure lifts the United States to the top of the list (US$44,620 per capita), and then pops Hong Kong in at No 2 worldwide, with AIC per capita amounting to US$42,371.

While the ICP study does not delve into how inequalities within economies confound such rosy measures of overall wealth – a glaring issue in both Hong Kong and the US – it does at an aggregate and regional level provide interesting glimpses into the inequalities that separate us.

It calculates that the 70 economies that fall into the “high income” category with a gross national income per capita of more than US$12,376 account for just 16.6 per cent of the world’s population, but a striking 48.8 per cent of the global economy on a PPP basis. The 30 “low income” economies (GNI per capita below US$1,025) account for 7.7 per cent of the world’s population, but just 0.8 per cent of global GDP.

While the East Asian economies (dominated by China) account for 31.1 per cent of the world’s GDP and a reasonably proportionate 31.5 per cent of the world’s population, other regions across the world show no such equilibrium.

South Asia (dominated by India) accounts for 23.9 per cent of the world’s population but just 8.5 per cent of global GDP, while North America (dominated by the US), with 5 per cent of the world’s population, accounts for 17.8 per cent of global GDP. Europe dominates similarly, with just 12.1 per cent of the world’s population, but 25.8 per cent of global wealth.

For those who complain that high incomes are of little comfort if local prices are very high, the message for Hong Kong is relatively comforting. Against a global Price Level Index averaging 100, Hong Kong is assessed to be moderately expensive, at 116, but this compares very favourably with European economies like Norway (192), Sweden (164), Austria (138) and Switzerland (204). It also compares well with the US (150), Japan (141), and with our antipodean friends New Zealand (152) and Australia (169).

And those who would like to live more cheaply may perhaps want to think twice. How many would want to swap our quality of life for that in the Philippines, Thailand (both 55) or Indonesia (53), or in the Central Asian republics where prices seem to average around one-third of those here in Hong Kong?

Whether you agree with the involvement of the Chinese government in the Chinese economy, the role of state enterprises, heavy investment in infrastructure or the extensive use of subsidies, the ICP bean counters illustrate vividly China’s global leadership here.

The report says China accounted in 2017 for almost 15 per cent (US$3.5 trillion) of the world’s government spending, with the US at 11 per cent and Japan at less than 6 per cent.

As Deaton notes, this massive ICP exercise does not call for the abolition of GDP measures, but reminds us of the need “for a more intelligent use of the accounts and for measuring what it does not include” – like environmental factors, and the impact of inequality. Perhaps then our top 10 list might look a little different.
Newsletter

Related Articles

Saudi Press
0:00
0:00
Close
Paris Saint-Germain's Greatest Triumph Is Football’s Lowest Point
OPEC+ Agrees to Increase Oil Output for Third Consecutive Month
Turkey Detains Istanbul Officials Amid Anti-Corruption Crackdown
Meta and Anduril Collaborate on AI-Driven Military Augmented Reality Systems
EU Central Bank Pushes to Replace US Dollar with Euro as World’s Main Currency
European and Arab Ministers Convene in Madrid to Address Gaza Conflict
U.S. Health Secretary Ends Select COVID-19 Vaccine Recommendations
Trump Warns Putin Is 'Playing with Fire' Amid Escalating Ukraine Conflict
India and Pakistan Engage Trump-Linked Lobbyists to Influence U.S. Policy
U.S. Halts New Student Visa Interviews Amid Enhanced Security Measures
Trump Administration Cancels $100 Million in Federal Contracts with Harvard
SpaceX Starship Test Flight Ends in Failure, Mars Mission Timeline Uncertain
King Charles Affirms Canadian Sovereignty Amid U.S. Statehood Pressure
Iranian Revolutionary Guard Founder Warns Against Trusting Regime in Nuclear Talks
UAE Offers Free ChatGPT Plus Subscriptions to Citizens
Lebanon Initiates Plan to Disarm Palestinian Factions
Iran and U.S. Make Limited Progress in Nuclear Talks
The Daily Debate: The Fall of the Dollar — Strategic Reset or Economic Self-Destruction?
Trump Administration's Tariff Policies and Dollar Strategy Spark Global Economic Debate
OpenAI Acquires Jony Ive’s Startup for $6.5 Billion to Build a Revolutionary “Third Core Device”
Turkey Weighs Citizens in Public as Erdoğan Launches National Slimming Campaign
Saudi-Spanish Business Forum Commences in Riyadh
Saudi Arabia and Spain Sign MoU to Boost SME Sectors
UK Suspends Trade Talks with Israel Amid Gaza Offensive
Iran and U.S. Set for Fifth Round of Nuclear Talks Amid Rising Tensions
Russia Expands Military Presence Near Finland Amid Rising Tensions
Indian Scholar Arrested in Crackdown Over Pakistan Conflict Commentary
Israel Eases Gaza Blockade Amid Internal Dispute Over Military Strategy
President Biden’s announcement of advanced prostate cancer sparked public sympathy—but behind closed doors, Democrats are in panic
A Chinese company made solar tiles that look way nicer than regular panels!
Indian jet shootdown: the all-robot legion behind China’s PL-15E missiles
The Chinese Dragon: The True Winner in the India-Pakistan Clash
Australia's Venomous Creatures Contribute to Life-Saving Antivenom Programme
The Spanish Were Right: Long Working Hours Harm Brain Function
Did Former FBI Director Call for Violence Against Trump? Instagram Post Sparks Uproar
US and UAE Partner to Develop Massive AI Data Center Complex
Apple's $95 Million Siri Settlement: Eligible Users Have Until July 2 to File Claims
US and UAE Reach Preliminary Agreement on Nvidia AI Chip Imports
President Trump and Elon Musk Welcomed by Emir of Qatar Sheikh Tamim with Cybertruck Convoy
Strong Warning Issued: Do Not Use General Chatbots for Medical, Legal, or Educational Guidance
Saudi Arabia Emerges as Global Tech Magnet with U.S. Backing and Trump’s Visit
This was President's departure from Saudi Arabia. The Crown Prince personally escorted him back to the airport.
NVIDIA and Saudi Arabia Launch Strategic Partnership to Establish AI Centers
Trump Meets Syrian President Ahmad al-Shara in Historic Encounter
Trump takes a blow torch to the neocons and interventionists while speaking to the Saudis
US and Saudi Arabia Sign Landmark Agreements Across Multiple Sectors
Why Saudi Arabia Rolled Out a Purple Carpet for Donald Trump Instead of Red
Elon Musk Joins Trump Meeting in Saudi Arabia
Trump says it would be 'stupid' not to accept gift of Qatari plane
Quantum Computing Threatens Bitcoin Security
×