GDP per Capita Statistics

GDP per capita is a measure of average income per person in a country.

• GDP stands for Gross Domestic Product. This measure National income / National Output and National expenditure.
• GDP per capita divides the GDP by the population.
• Real GDP per capita takes into account inflation.

World Map of GDP per Capita

Top 10 GDP Per Capita($)

1      Qatar     88,222
2      Luxembourg     81,466
3      Singapore     56,694
4      Norway     51,959
5      Brunei     48,333
6      United Arab Emirates     47,439
7      United States     46,860
—      Hong Kong     45,944
8      Switzerland     41,950
9      Netherlands     40,973
10      Australia     39,764

(21. United Kingdom 35,073)

Source: IMF

Lowest GDP Per Capita ($)

173      Afghanistan     909
174      Togo     863
175      Malawi     821
176      Sierra Leone     810
177      Niger     761
178      Central African Republic     747
179      Eritrea     683
180      Zimbabwe     436
181      Burundi     412
182      Liberia     396
183      Congo, Democratic Republic of the     329

Limitations of GDP Statistics

There is an interesting article in the Economist this week, which points out an obvious limitation in the main economic statistic – GDP growth.

• Basically, GDP growth measures the output of an actual economy. However, to gain a better understanding of average living standards we need to look at the growth of GDP per capita. For example, if one country has GDP growth of 4%, but the population increases in size by 4%, then the average citizen will have the same income.
• Another country could have zero GDP growth but, if the population is declining then the average citizen will be better off.
• The economist points out that when we use GDP per capita growth figures, Japan has actually outperformed the US economy. Because although actual GDP has increased faster in the US, this has been boosted by a growing population.
• It means that other fast-growing economies like India should also have their GDP statistics treated with caution. Although growth rates are much higher in India, it is partly boosted by a rapidly rising population.
• There are still many limitations in comparing GDP per capita statistics between different countries
  • Need to take into account purchasing power parity of local currency.
  • GDP only measures output excludes factors such as quality of the environment, level of pollution e.t.c. See: measures of economic welfare such as MEW and

GDP and Definition of a Recession?

A definition of a recession. Is a period of negative economic growth. However, if America has population growth of 1% a year and GDP growth of 0.9%; technically, the average citizen is seeing a decline in income. Therefore, this might be a better guide to when a recession actually occurs.

Why GDP is still Important

• However, GDP is still important. If we take Japan they have a national debt of 180% GDP. To reduce this national debt, Real GDP growth is more important than Real GDP per Capita growth.
• A falling population means an ageing population and worsening demographics which will only worsen the Japanese debt

Limitation of GDP per Capita Statistics

Related

• Genuine Progress Indicator GPI v GDP
• GDP and Happiness
• Real GDP per capita definition