A recent World Bank report reveals that Nigeria, South Africa and Egypt are the three big economies in Africa and control about half of the continent’s economy
| By Anayo Ezugwu | May 26, 2014 @ 01:00 GMT
THE World Bank Group has said that Nigeria, South Africa and Egypt account for about half of the African economy. This was contained in the new data released in the banks’ website recently. The report which ranked global economies on the basis of the strength of their currency said that China will overtake the United States of America by the end of 2014 as the largest economy in the world.
The report said that low income economies, as a share of the world Gross Domestic Products, GDP, were more than two times larger based on Purchasing Power Parity, PPP, than respective exchange rate shares in 2011. Yet, these economies accounted for only 1.5 percent of the global economy, but nearly 11 percent of the world population. Roughly 28 percent of the world’s population lives in economies with GDP per capita expenditures above the $13,460 world average and 72 percent are below that average.
The International Comparison Programme, ICP, which released the new data said that the world economy produced goods and services worth over $90 trillion in 2011, and that almost half of the world’s total output came from low and middle income countries. Six of the world’s 12 largest economies were in the middle income category (based on the World Bank’s definition). When combined, the 12 largest economies account for two-thirds of the world economy, and 59 percent of the world population.
The PPP-based world GDP amounted to $90,647 billion, compared to $70,294 billion measured by exchange rates. Middle income economies’ share of global GDP is 48 percent when using PPPs and 32 percent when using exchange rates. The approximate median yearly per capita expenditures for the world – at $10,057 – means that half of the global population has per capita expenditures above that amount and half below.
According to the report, the six largest middle income economies are China, India, Russia, Brazil, Indonesia and Mexico, which account for 32.3 percent of world GDP, whereas the six largest high income economies are United States, Japan, Germany, France, United Kingdom, and Italy which account for 32.9 percent.
Asia and the Pacific, including China and India, account for 30 percent of world GDP, Statistical Office of the European Communities, Eurostat, and the Organization for Economic Cooperation and Development, OECD, 54 percent, Latin America 5.5 percent (excluding Mexico, which participates in the OECD and Argentina, which did not participate in the ICP 2011), Africa and Western Asia about 4.5 percent respectively.
China and India make up two-thirds of the Asia and the Pacific economy, excluding Japan and South Korea, which are part of the OECD comparison. Russia accounts for more than 70 percent of the CIS, and Brazil for 56 percent of Latin America. South Africa, Egypt, and Nigeria account for about half of the African economy.
The report stated that going by the Price Level Index, PLI, which is the ratio of a PPP to a corresponding exchange rate the most expensive economies in GDP terms are Switzerland, Norway, Bermuda, Australia and Denmark, with indices ranging from 210 to 185. The United States ranked 25th in the world, lower than most other high-income economies, including France, Germany, Japan, and the United Kingdom. Twenty-three economies are showing a PLI of 50 or below. The cheapest economies according to the report, are Egypt, Pakistan, Myanmar, Ethiopia and Lao People’s Democratic Republic, with indices ranging from 35 to 40.
According to the World Bank, the five economies with the highest GDP per capita are Qatar, Macao SAR, China, Luxembourg, Kuwait, and Brunei. The first two economies have more than $100,000 per capita. Eleven economies have more than $50,000 per capita, while they collectively account for less than 0.6 percent of the world’s population. The United States has the 12th highest GDP per capita. Eight economies, Malawi, Mozambique, Central African Republic, Niger, Burundi, Congo DR, Comoros and Liberia, have a GDP per capita of less than $1,000.
The World Bank report disclosed that a general measure of material well-being of each economy’s population is measured better by actual individual consumption per capita. It said that a measure of all expenditures in the economy that directly benefit individuals rather than by GDP per capita is more revealing of the impact of government policy on individuals.
By this measure, the five economies with highest actual individual consumption per capita are Bermuda, United States, Cayman Islands, Hong Kong SAR, China, and Luxembourg, respectively. The world average actual individual consumption per capita is approximately $8,647.
The report further stated that at 27 percent, China now has the largest share of the world’s expenditure for investment (gross fixed capital formation); followed by the United States at 13 percent. India, Japan and Indonesia follow with 7 percent, 4 percent, and 3 percent, respectively. China and India account for about 80 percent of investment expenditures in the Asia and the Pacific region. Russia accounts for 77 percent of CIS, Brazil for 61 percent of Latin America and Saudi Arabia for 40 percent of Western Asia.
According to the report, under the authority of the United Nations Statistical Commission, the 2011 round of ICP covered 199 economies which is the most extensive effort to measure Purchasing Power Parities PPPs, across countries ever. ICP 2011 estimates benefitted from a number of methodological improvements over past efforts to calculate PPPs.
The ICP’s principal outputs are PPPs for 2011 and estimates of PPP-based gross domestic product and its major components in aggregate and per capita terms. When converting national economic measures (e.g. GDP), into a common currency, PPPs are a more direct measure of what money can buy than exchange rates.
ICP implementation was led and coordinated by the ICP Global Office, hosted by the World Bank, in partnership with regional agencies overseeing activities in eight geographic regions: Africa, Asia and the Pacific, Commonwealth of Independent States (CIS), Latin America, the Caribbean, Western Asia, Pacific Islands, and the countries of the regular PPP program managed by the Eurostat and OECD. In addition, two singleton economies, Georgia and Iran, participated in bilateral exercises with partner economies, without being part of any regional comparisons.