London Daily

Focus on the big picture.
Tuesday, Aug 05, 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

0:00
0:00
Close
Elon Musk Receives $23.7 Billion Tesla Stock Award
Texas House Paralyzed After Democrats Walk Out Over Redistricting
Mexican Cartels Complicate Sheinbaum’s U.S. Security Talks
Mark Zuckerberg Declares War on the iPhone
India Rejects U.S. Tariff Threat, Defends Russian Oil Purchases
United States Establishes Strategic Bitcoin Reserve and Digital Asset Stockpile
Thousands of Private ChatGPT Conversations Accidentally Indexed by Google
China Tightens Mineral Controls, Curtailing Critical Inputs for Western Defence Contractors
OpenAI’s Bold Bet: Teaching AI to Think, Not Just Chat
Tesla Seeks Shareholder Approval for $29 Billion Compensation Package for Elon Musk
Nvidia is cutting prices on its RTX 50-series graphics cards after sales slowed and inventories piled up
Ghislaine Maxwell Transferred to Minimum-Security Prison Amid Ongoing DOJ Discussions
U.S. Tariffs Surge to Highest Levels in Nearly a Century Under Second Trump Term
Matt Taibbi Slams Media for Role in Russiagate Narrative
Pilots Call for Mental Health Support Without Stigma
All Five Trapped Miners Found Dead After El Teniente Mine Collapse
Ong Beng Seng Pleads Guilty in Corruption Case Linked to Former Singapore Transport Minister
BP’s Largest Oil and Gas Find in 25 Years Uncovered Offshore Brazil
Italy Fines Shein One Million Euros for Misleading Sustainability Claims
JPMorgan and Coinbase Unveil Partnership to Let Chase Cardholders Buy Crypto Directly
Declassified Annex Links Soros‑Affiliated Officials and Clinton Campaign to ‘Russiagate’ Narrative
UK's Online Safety Law: A Front for Censorship
Nationwide Protests Erupt in Brazil Demanding Presidential Resignation
Parents Abandon Child at Barcelona Airport Over Passport Issue
Mystery Surrounds Death of Brazilian Woman with iPhones Glued to Her Body
Bus Driver Discovers Toddler Hidden in Suitcase in New Zealand
Switzerland Celebrates 734 Years of Independence Amid Global Changes
U.S. Opens Official Investigation into Former Trump Prosecutor Jack Smith
Leaked audio of Canada's new PM Mark Carney admitting the truth about the Net Zero agenda: "We're gonna make a lot of money off of this."
China Enforces Comprehensive Ban on Cryptocurrency Activities
Absolutely 100% Realistic EVO Series Doll by EXDOLL (Chinese Company) used mainly for carnal purposes
World Economic Forum founder Klaus Schwab: "In this new world, we must accept... total transparency. You have to get used to it. You have to behave accordingly. But if you have nothing to hide, you shouldn't be afraid."
Meet Mufti Hamid Patel, head of Office for Standards in Education in Pakistan
George Soros tells the World Economic Forum: "President Trump is a con man and the ultimate narcissist, who wants the world to revolve around him."
Hamas are STARVING the hostages.
Decline in Tourism in Majorca Amidst Ongoing Anti-Tourism Protests
British Tourist Dies Following Hair Transplant in Turkey, Police Investigate
Poland Begins Excavation at Dziemiany After New Clue to World War II‑Era Nazi Treasure
WhatsApp Users Targeted in New Scam Involving Account Takeovers
Trump Threatens Canada with Tariffs Over Palestinian State Recognition
Trump Deploys Nuclear Submarines After Threats from Former Russian President Medvedev
Trump Sues Murdoch in “Heavyweight Bout”: Lawsuit Over Alleged Epstein Letter Sets Stage for Courtroom Showdown
Germany Enters Fiscal Crisis as Cabinet Approves €174 Billion in New Debt
Trump Administration Finalizes Broad Tariff Increases on Global Trade Partners
J.K. Rowling Limits Public Engagements Citing Safety Fears
JD.com Launches €2.2 Billion Bid for German Electronics Retailer Ceconomy
Azerbaijan Proceeds with Plan to Legalise Casinos on Artificial Islands
Former Judge Charged After Drunk Driving Crash Kills Comedian in Brazil
Jeff Bezos hasn’t paid a dollar in taxes for decades. He makes billions and pays $0 in taxes, LEGALLY
China Increases Use of Exit Bans Amid Rising U.S. Tensions
×