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Switzerland Drops, Luxembourg And Ireland Rise In GDP Rankings

by Ulrika Lomas,, Brussels

22 November 2007

The OECD has released new GDP and household consumption comparisons based on purchasing power parities showing that Switzerland’s GDP per head slipped from 30% to 20% above the OECD average between 2002 and 2005, while Ireland and Luxembourg are two of the only four major countries with GDPs more than 25% above the average - a stunning 146% above, in Luxembourg's case.

The new comparisons show the level of gross domestic product per head has risen closer to the OECD average in a number of countries including Turkey, Mexico, the Slovak Republic, Hungary, Poland and the Czech Republic.

Italy’s GDP per head fell from a level that was 5% above the OECD average to a level 5% below between 2002 and 2005. Meanwhile, the rising value of Norway’s oil exports helped its GDP per head jump from 45% to 65% above the OECD average.

The latest PPP calculations also show that the share of GDP represented by household consumption of goods and services can vary considerably from country to country. Britain’s GDP per head is about 7% above the OECD average but its actual individual consumption is 20% above the average, due to low levels of investment, according to the OECD. The situation is the opposite in the Netherlands and Australia where the relative ranking of GDP per head is higher than for consumption per head.

The comparison tables cover the 30 member countries of the OECD, the 27 member states of the European Union, ten CIS countries, six Western Balkan countries and Israel.

Countries scoring between 100% and 124% of average include Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Iceland, Japan, Netherlands, Sweden, Switzerland and the United Kingdom.

Coming in between 75% and 99% are Cyprus, Greece, Israel, Italy, New Zealand, Slovenia and Spain, while those in the 50% to 74% range are the Czech Republic, Estonia, Hungary, Korea, Malta, Portugal and the Slovak Republic.

The OECD points out that GDP per capita makes no allowance for international transfer payments such as profits received from abroad or remittances sent abroad. Gross national income (GNI) takes such flows into account. For some countries, in particular Switzerland, Ireland and Luxembourg, moving from GDP to GNI can markedly change the picture of income flows, putting the GDP per capita figure into perspective. For example, Swiss GNI per capita is estimated to be at more than 30 percent over the OECD average , significantly higher than GDP per capita (index of 122), signaling net transfer payments into Switzerland. The opposite holds for two other countries, Ireland and Luxembourg. Measured in terms of GNI per capita, their index relative to the OECD average falls from 131 to around 110 for Ireland, and from 246 to around 200 for Luxembourg, signaling the presence of significant net transfers out of these countries. For most other OECD countries, GNI and GDP rankings are very similar.

The OECD also cautions that, while GDP and household consumption are indicators of economic and consumer activity, they should not be mistaken for direct measures of the well-being of citizens. This encompasses many elements, such as the health status of the population, the environment or the level of security. GDP is an important milestone in the measurement of citizens’ well-being, but only one.

The weather doesn't rate a mention from the OECD, but then that's not something governments can control, even if Mayor Yuri Lushkov can deliver you a sunny day in Moscow for a mere half a million (diminished) dollars.

TAGS: Italy

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