In this article, we will be taking a look at the richest to poorest countries in Europe by GDP per capita (PPP). To skip our detailed analysis of the European economy, you can go directly to 5 Richest to Poorest Countries in Europe by GDP Per Capita (PPP).
Europe is a fairly economically stable region compared to the rest of the world. The major reason for that is the open trade between European Union (EU) countries. The poorest countries in Europe are still far better than the poorest countries in Arab and Africa. The EU operates as a single market comprising 27 countries. According to the European Union, the total GDP value of goods and services produced in the EU region accounted for EUR14.5 trillion in 2021.
Lately, there have been economic hurdles for European countries, facing increasing inflation, higher interest rates, and energy crises led by Russia’s invasion of Ukraine. Let’s discuss these hurdles.
Europe’s Economic Outlook
Europe has some grueling tasks to maintain such as dropping inflation and sustaining financial stability to preserve its economic growth. Since the middle of 2022, Europe’s growth has tumbled leading to a rise in inflation as households’ real incomes decreased. European countries were able to avoid an all-out recession last winter due to lower energy prices and government reliefs. While monetary policy is getting hostile, there are risks across the financial sector. With all these risks roaming around Europe’s economy, the outlook suggests slow growth and high inflation.
The positives for Europe are the lower energy prices and ease in supply bottlenecks. As per IMF’s April 2023 Regional Economic Outlook, Europe is expected to relax financial conditions in 2024, which should support a slow recovery. Emerging European economies are expected to perform better than advanced European economies. Annual growth for advanced European economies and emerging European economies is projected to rebound from 0.7% in 2023 to 1.4% in 2024 and from 1.1% to 3%, respectively. The inflation in advanced European economies is expected to drop to 5.6% in 2023 and 3% in 2024 and inflation in emerging European economies is anticipated to decline to 11.7% in 2023 and 5.5% in 2024.
In addition, the GDP growth for European economies is forecasted to plunge to 0.7% in advanced European economies and 1.1% in emerging European economies in 2023. The overall GDP growth is expected to bounce back to 1.4% and 3% in 2024, respectively. The April 2023 Regional Economic Outlook highlights:
“Inflation remains very high, but economic growth has slowed rapidly as some financial sector risks have materialized and Europe continues to grapple with the fallout from the energy crisis caused by Russia’s invasion of Ukraine and the pandemic. The expected recovery in the course of the year assumes that policymakers manage to keep financial stress contained and tame inflation without a recession. Given still tight labor markets, monetary policy will need to remain contractionary until inflation subsides decisively. Fiscal consolidation will need to become more decisive. Financial stability could be tested again, and policymakers should closely monitor developments, identify weaknesses, and take swift action where needed.”
Russia-Ukraine War Impact on European Economy
Russia’s invasion of Ukraine has had a severe impact not only on the European economy but the global economy as well. The global economy was fighting the aftereffects of the COVID-19 pandemic as the Russia-Ukraine war began, adding further economic constraints. The war has massively triggered shocks in energy and food markets, restraining supply and increasing prices to unprecedented levels. Compared to the rest of the world, Europe has been particularly vulnerable to economic crises driven by the Russia-Ukraine war. According to the European Central Bank, in January 2023, food prices soared by 14.1% year over year. The food products that were imported from Ukraine and Russia, such as wheat and oilseeds, played a massive role in the increase in food inflation. For instance, European countries had to pay 47% higher prices for sunflower oil and other edible oils in January 2023, year over year. However, things are getting better in the European market as inflation is starting to drop.
Business Environment in Europe
The situation is getting better as food inflation rates have started to cool across Europe. July’s inflation showed a comparable month-on-month decline in the European Union. According to Eurostat, the annual inflation rate in the euro area dropped from 5.5% in June to 5.3% in July. Whereas in July 2022, the annual inflation rate was 9.8%. The highest contribution to the annual euro area inflation rate in July 2023 was driven by services with +2.47% points followed by the food, alcohol & tobacco sectors contributing +2.20% points.
With a slow growth recovery and a decline expected in inflation in the European economy in 2024, the business environment would bring suitable opportunities for new startups and established market players. As we have highlighted, food prices have been the key point for the European economy. Some of the key players from the food industry have a big role to play including Nestle SA (SWX:NESN), Unilever plc (LON:ULVR), and PepsiCo, Inc. (NASDAQ:PEP).
On August 31, Reuters reported that France’s finance minister, Bruno Le Maire said the French government made a deal with food companies to cope with inflation. However, Nestle SA (SWX:NESN), Unilever plc (LON:ULVR), and PepsiCo, Inc. (NASDAQ:PEP) were not “cooperating” with the agreement, added Le Maire. The French government wishes to restrict the increasing food prices in the country. However, food giants have their way of dealing with the situation. All three multinational food companies have performed significantly well during the first half year of 2023, despite the economic troubles.
On July 27, Nestle SA (SWX:NESN) announced the results of the first half of 2023, posting revenue of CHF 46.3 billion. The company reported its earnings per share of CHF 2.13, up 11.1% year over year. Nestle SA (SWX:NESN) CEO Mark Schneider has pointed out that they have priced their products very moderately and conservatively. On July 27, Reuters reported that Nestle SA (SWX:NESN) has highlighted that they will raise prices at a moderate rate during the remaining half of 2023. The price increases have allowed Nestle SA (SWX:NESN) to cover up its expenses and report positive and strong earnings.
Similarly, Unilever plc (LON:ULVR) also posted strong first-half outcomes for 2023. On July 25, Unilever plc (LON:ULVR) reported a half-year 2023 sales turnover of EUR30.4 billion, a 9.1% higher sales growth compared to H1 2022. Unilever plc (LON:ULVR) sales growth in Europe was 6.4% during H1 2023, which is 20% of the global sales of the company. Unilever plc’s (LON:ULVR) growth across Europe was broad-based and price-led across countries, with double-digit growth in the United Kingdom and Spain, led by Personal Care. In H1 2023 outcomes, Unilever plc (LON:ULVR) pointed out that it will keep its prices moderate considering the volatility and high-cost environment. Here are some of the comments from the H1 2023 report:
“In a volatile and high-cost environment, we will deliver another year of strong underlying sales growth in 2023. We expect underlying sales growth for the full year to be above 5%, ahead of our multi-year range, with underlying price growth continuing to moderate through the year. Our expectation for net material inflation (NMI) for 2023 is around EUR2 billion of which EUR0.4 billion is anticipated in the second half. We continue to expect a modest improvement in underlying operating margin for the full year, reflecting higher gross margin and increased investment behind our brands.”
On July 13, PepsiCo, Inc. (NASDAQ:PEP) reported its Q2 2023 earnings and posted strong outcomes with earnings per share of $2.09, surpassing EPS consensus by $0.13. During the Q2 2023 earnings call, PepsiCo, Inc. (NASDAQ:PEP) CEO Ramon Laguarta mentioned that consumer responses have been positive despite the rise in prices. Here are some of the comments from Q2 2023 earnings call:
“We’ve been able to raise prices and consumers stay within our brands. We’re seeing consumers shopping in more stores than before. They’re looking for better deals. They’re starting to look for optimization. They’re going to channels that have better perceived value. They’re buying more in Dollar stores or they buy more in mass or in clubs. So every segment of the consumer is making adjustment.”
Photo by Jacek Dylag on Unsplash
Our Methodology
For our list of the richest to poorest countries in Europe by GDP per capita (PPP), we sourced the data from the IMF’s database which tracks GDP per capita, purchasing power parity (PPP) (current international $). We selected the top 25 countries with the least GDP per capita and ranked them in descending order of this metric, that is, from richest to poorest.
Richest to Poorest Countries in Europe by GDP Per Capita (PPP)
25. Italy
GDP per capita (PPP): $54,220
Italy is a comparatively strong economy with a GDP of $3.2 trillion. With a GDP per capita of $54, 220, Italy ranks 25th on our list of the richest to poorest countries in Europe by GDP per capita (PPP).
Some of the leading food conglomerates operating across Europe include Nestle SA (SWX:NESN), Unilever plc (LON:ULVR), and PepsiCo, Inc. (NASDAQ:PEP).
24. Slovenia
GDP per capita (PPP): $52,640
Slovenia has a GDP of $111.29 billion and has a GDP per capita of $52,640. Slovenia makes it to our list of the richest to poorest countries in Europe by GDP per capita (PPP).
23. Czech Republic
GDP per capita (PPP): $50,960
With a GDP of $536.91 billion, the Czech Republic ranks among the richest to poorest countries in Europe by GDP per capita (PPP). The Czech Republic has a GDP per capita of $50,960.
22. Spain
GDP per capita (PPP): $49,650
Spain has a GDP of $2.36 trillion and is one of the strongest European economies. With a GDP per capita of $49,650, Spain ranks 22nd on our list of the richest to poorest countries in Europe by GDP per capita (PPP).
21. Lithuania
GDP per capita (PPP): $49,270
The GDP of Lithuania is $137.39 billion as it ranks among the richest to poorest countries in Europe by GDP per capita (PPP). Lithuania has a GDP per capita of $49,270.
20. Estonia
GDP per capita (PPP): $46,390
With a GDP of $61.76 billion, Estonia makes it to our list of the richest to poorest countries in Europe by GDP per capita (PPP). Estonia has a GDP per capita of $46,390.
19. Poland
GDP per capita (PPP): $45,340
Poland has a GDP of $1.71 trillion and has a GDP per capita of $45,240. Poland makes it to our list of the richest to poorest countries in Europe by GDP per capita (PPP).
18. Portugal
GDP per capita (PPP): $44,710
The GDP of Portugal is $460.13 billion as it ranks among the richest to poorest countries in Europe by GDP per capita (PPP). Portugal has a GDP per capita of $44,710.
17. Hungary
GDP per capita (PPP): $43,910
Hungary has a GDP of $426.94 billion and has a GDP per capita of $43,910. Hungary ranks 17th on our list of the richest to poorest countries in Europe by GDP per capita (PPP).
16. Croatia
GDP per capita (PPP): $42,530
With a GDP of $163.36 billion, Croatia makes it to our list of the richest to poorest countries in Europe by GDP per capita (PPP). Croatia has a GDP per capita of $42,530.
15. Romania
GDP per capita (PPP): $41,630
The GDP of Romania is $783.9 billion as it ranks 15th on our list of the richest to poorest countries in Europe by GDP per capita (PPP). Romania has a GDP per capita of $41,630.
14. Slovak Republic
GDP per capita (PPP): $41,510
With a GDP of $225.71 billion, Slovak Republic makes it to our list of the richest to poorest countries in Europe by GDP per capita (PPP). The Slovak Republic has a GDP per capita of $41,510.
13. Turkiye
GDP per capita (PPP): $41,410
Turkiye is one of the emerging economies of Europe with a GDP of $3.57 trillion. With a GDP per capita of $41,410, Turkiye ranks 13th on our list of the richest to poorest countries in Europe by GDP per capita (PPP).
12. Latvia
GDP per capita (PPP): $40,260
The GDP of Latvia is $75.91 billion as it ranks among the richest to poorest countries in Europe by GDP per capita (PPP). Latvia has a GDP per capita of $40,260.
11. Greece
GDP per capita (PPP): $39,480
The country along the islands of Aegean and Ionian seas has a strong economy with a GDP of $418.11 billion. Greece has a GDP per capita of $39,480. Greece ranks 11th among the richest to poorest countries in Europe by GDP per capita (PPP).
10. Russian Federation
GDP per capita (PPP): $34,840
The Russian Federation is part of both Asia and Europe and has one of the largest economies in the world, with a GDP of $4.99 trillion. With a GDP of $34,840, the Russian Federation makes it to our list of the richest to poorest countries in Europe by GDP per capita (PPP).
9. Bulgaria
GDP per capita (PPP): $32,010
With a GDP of $216.27 billion, Bulgaria makes it to our list of the richest to poorest countries in Europe by GDP per capita (PPP). Bulgaria has a GDP per capita of $32,010.
8. Montenegro
GDP per capita (PPP): $27,760
Montenegro is a small country with a population of 616,160 and a GDP of $17.28 billion. Montenegro has a GDP per capita of $27,760 and ranks eighth on our list of the richest to poorest countries in Europe by GDP per capita (PPP).
7. Serbia
GDP per capita (PPP): $25,430
With a GDP of $173.37 billion, Serbia makes it to our list of the richest to poorest countries in Europe by GDP per capita (PPP). Serbia has a GDP per capita of $25,430.
6. Belarus
GDP per capita (PPP): $23,450
The GDP of Belarus is $217.04 billion as it ranks sixth on our list of the richest to poorest countries in Europe by GDP per capita (PPP). Belarus has a GDP per capita of $23,450.
Top food multinationals that have operations all over the world include Nestle SA (SWX:NESN), Unilever plc (LON:ULVR), and PepsiCo, Inc. (NASDAQ:PEP).
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Disclosure: None. 25 Richest to Poorest Countries in Europe by GDP Per Capita (PPP) is originally published on Insider Monkey.