European
GDP per inhabitant in 2005 varied by one to five across the EU25 Member States; Ireland 40% above average
By Finfacts Team
Jun 15, 2006, 10:56

Nowcasts (short-term assessments) of purchasing power parities1 (PPP) for 2005 are now available for the European Union Member Countries. Based on these nowcasts, GDP per inhabitant2 in Luxembourg3 (partly due to the large share of cross-border workers in total employment) was more than twice the EU25 average in 2005.

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Eurozone countries in blue

Ireland was nearly 40% above average (Ireland's figures are partly boosted by the strong multinational presence), while Denmark, the Netherlands, Austria and Belgium were around 20% above average. The United Kingdom and Sweden were 15% above average, and Finland, Germany and France about 10% above average. Italy and Spain were around the EU25 average.

Cyprus, Greece and Slovenia were about 20% below average. The Czech Republic, Portugal and Malta were around 30% below average, and Hungary and Estonia about 40% below. Slovakia, Lithuania, Poland and Latvia were around half the EU25 average.

These figures for GDP per inhabitant, expressed in terms of purchasing power standards4 (PPS), are published by Eurostat, the Statistical Office of the European Communities.

GDP per inhabitant in 2005 in PPS, EU25 = 100

EU25 Member States, Acceding, Candidate and EFTA countries5

Luxembourg
248
Czech Republic
73
Ireland
137
Portugal
71
Denmark
124
Malta
69
Netherlands
123
Hungary
61
Austria
123
Estonia
57
Belgium
118
Slovakia
55
United Kingdom
115
Lithuania
52
Sweden
115
Poland
50
Finland
112
Latvia
47
Germany
110
Romania
35
France
109
Bulgaria
32
Euro area
106
Croatia
47
Italy
103
Turkey
31
EU25
100
Former Yugoslav Republic of Macedonia
26
Spain
99
Cyprus
83
Norway
165
Greece
82
Switzerland
128
Slovenia
80
Iceland
126
  1. The regular publication schedule of Purchasing Power Parities (PPP) includes four estimates for a particular year, each of them including GDP per inhabitant. Taking 2005 as an example, the first estimate (nowcast), based on projections, is published in mid-June 2006. At the end of 2006, the second estimate (preliminary data) will be published, partly based on prices collected in 2005. The third estimate will become available by end-2007 and the fourth (final data) by end-2008. Between PPP estimates, revisions to national accounts data may also lead to revised GDP per inhabitant figures. The nowcasts of PPP, used for GDP per capita for 2005, have a provisional character. This provisional status arises from the input data availability at the point in time of nowcasting.

The GDP per inhabitant figures in national currency are converted, using PPP, to “real” volumes. Two main basic data sets are required for the calculation of PPP: prices from the PPP price surveys and weights (GDP expenditure) from National Accounts (NA). Fully validated results of PPP price surveys are usually available only 12 months after the survey has been executed. At the point in time when the nowcasting is undertaken (t+5.5 months), only partly validated price data are available from price surveys for the reference year in question. NA information on main expenditure aggregates becomes available for the first time by March-April following the reference year. At this point in time, it is limited to a few main aggregates. For the aggregation of PPP more detailed expenditure weights are necessary, so that the detailed expenditure structure of the year 2004 is used to estimate detailed weights for 2005 by scaling it to the newly available information for 2005 at main aggregates level.

  1. GDP, and thus GDP per inhabitant, provides a measure of the total economic activity in a country. It may be used to compare the degree of economic development of countries. Most EU Member States have recently adapted their national accounts to comply with methodological improvements agreed upon internationally. One important change is the allocation of “financial intermediation services indirectly measured” (FISIM) to user sectors. The Czech Republic, Cyprus and the United Kingdom have not published GDP including this allocation of FISIM for 2005 yet, and neither have Bulgaria, Croatia, Turkey, the former Yugoslav Republic of Macedonia, Switzerland and Norway. To the extent that FISIM are recorded as final consumption and net export, GDP levels increase by the allocation by around 0.5% to 2.0% of GDP. Comparability of data for these countries is hence reduced.

GDPs per inhabitant in PPS provide an indication of the comparative order of magnitude of the total economic activity one country in relation to others. The level of uncertainty associated with the basic price and NA data, and the methods used for compiling PPPs imply that strict ranking of countries is not advisable.

  1. The high level of GDP per inhabitant in Luxembourg is partly due to the large share of cross-border workers in total employment. While contributing to GDP, they are not taken into consideration as part of the resident population which is used to calculate GDP per inhabitant.
  2. The PPS (purchasing power standard) is an artificial currency that takes into account differences in national price levels. This unit allows meaningful volume comparisons of economic indicators over countries. Aggregates expressed in PPS are derived by dividing aggregates in current prices and national currency by the respective Purchasing Power Parity (PPP).
  3. Acceding Countries: Bulgaria, Romania. Candidate Countries: Croatia, the former Yugoslav Republic of Macedonia and Turkey. EFTA: Iceland, Norway and Switzerland. No data available for Liechtenstein.



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