We recently compiled a report on the 20 Countries with the Highest Purchasing Power Parity in the World in 2024 and in this article we will look at the country that topped our list.
Regional GDP Comparisons: The Role of GDP (PPP) in Economic Forecasting
Purchasing Power Parity is the rate at which the currency of one country would have to be converted into that of another country to buy the same amount of goods and services in each country. For example, a haircut in New York is more expensive than in Delhi, a taxi ride costs more in Paris than in China, and a cricket game ticket is pricier in London than in Lahore. This price disparity is due to lower wages in underdeveloped countries, making services, which are labor-intensive, less expensive. Ignoring these price differences underestimates the purchasing power of consumers in emerging and developing countries. Therefore, PPP is generally considered a better measure of overall comparison.
When international financial institutions produce regional and global statistics using aggregate data from numerous countries it is converted from its national currency to a common currency, typically the US dollar. There are two main methods for this conversion: market exchange rates and purchasing power parity (PPP) exchange rates. Market exchange rates are the rates prevailing in the foreign exchange market, whereas PPP exchange rates reflect the rate at which one country’s currency would need to be converted to another’s to purchase the same amount of goods and services in each country.
GDP at PPP utilizes PPP exchange rates to convert a country’s nominal GDP into a common currency, allowing for more accurate comparisons of economic output and living standards across nations. Adjusting GDP figures for differences in price levels and purchasing power provides a more accurate representation of the real value of goods and services produced, reflecting actual living standards and economic well-being. It accounts for the lower cost of non-traded goods and services in low-income countries offers more stability over time compared to market exchange rates and helps forecast economic comparisons more efficiently. Whereas, market-based rates only reflect internationally traded goods, ignoring the fact that non-traded goods and services are often cheaper in low-income countries compared to high-income ones.
International organizations rely on GDP at PPP for global and regional economic analysis, forecasting, and policy recommendations. Despite its advantages, calculating PPP is complex and can be subject to measurement challenges, potentially affecting the accuracy of GDP at PPP figures. However, GDP (PPP) creates a more equitable basis for comparing economies with different currencies and price levels.
The Asia and Pacific region has the highest GDP (PPP) with $85.49 trillion. This is followed by East Asia at $47.49 trillion, the Western Hemisphere at $44.76 trillion, Europe at $38.3 trillion, and North America at $34.82 trillion.
Major Company Shaping the Global Economy
The companies that contribute the most to the global economy based on purchasing power parity (PPP) include leading corporations such as Alibaba Group Holding Limited (NYSE:BABA). The company has a significant economic influence due to its extensive operations, market reach, economic activity, and growth.
Alibaba Group Holding Limited (NYSE:BABA) is a multinational conglomerate specializing in e-commerce, payment processing, logistics, retail, internet, and technology services. In addition to its core business areas, Alibaba Group Holding Limited (NYSE:BABA) has a presence in digital media, entertainment, and cloud computing and offers streaming services and online video and music streaming platforms. The company operates China’s largest wholesale marketplace and offers products in over 40 categories to buyers in more than 190 countries. Alibaba Group Holding Limited (NYSE:BABA) is also actively involved in artificial intelligence research and development.
On May 14, Alibaba Group Holding Limited (NYSE:BABA) reported that its revenue for the three months ending on March 31, increased 8% year-on-year to $33.26 billion. The company beat its revenue estimate by $256.74 million. Taobao and Tmall Group reported the highest revenue which increased by 4% to $12.81 billion. Alibaba International Digital Commerce Group reported the highest growth with revenue reaching $3.77 billion with a 45% increase compared to the same quarter in the previous year. During the quarter Alibaba Group Holding Limited (NYSE:BABA) repurchased a total of 524 million ordinary shares in the United States and Hong Kong markets for a total of $4.8 billion. Analysts predict that for the quarter ending on June 30, Alibaba Group Holding Limited’s (NYSE:BABA) revenue is expected to reach $33.95 billion.
Alibaba Group Holding Limited (NYSE:BABA) is focusing on its AI technology and continuously improving user experience and efficiency in areas such as cross-platform product listing, optimization of product details, targeted recommendations, and multilingual search. An increasing number of small- and medium-sized enterprises (SMEs) on the platform are to leveraging AI services and over 17,000 SMEs have already subscribed to the AI Business Assistant launched on Alibaba.com due to this, searches for AI-optimized products have increased by 37%. On May 24, Alibaba Group Holding Limited (NYSE:BABA) announced plans to establish new availability zones and significantly increase global investment to promote AI innovation and development. During a recent global summit held in Paris, the company revealed its plan to set up its first cloud region in Mexico and expand data centers in Malaysia, the Philippines, Thailand, and South Korea over the next three years. By increasing investment in cloud computing and artificial intelligence (AI) infrastructure across major international markets, Alibaba Cloud aims to offer a broader array of cloud computing and AI products to customers all around the world.
Purchasing Power Parity (PPP) is a crucial tool for making accurate and equitable economic comparisons across countries with different currencies and price levels. By considering the varying costs of goods and services, GDP at PPP offers a more realistic view of economic output and living standards, particularly in low-income and emerging markets. With that in context let’s look at the 20 countries with the highest purchasing power parity in the world in 2024.
An expansive view of the cityscape, showing the impact of the company’s activities in China.
Our Methodology
To compile our list of the 20 countries with the highest purchasing power parity in the world in 2024, we sourced data from the International Monetary Fund (IMF). IMF provides data for the Gross Domestic Product (GDP) and the percentage share of the world according to purchasing power parity (PPP) in 2024. We also sourced the GDP per capita (PPP) from the IMF and the population of these countries from the United Nations. Our list ranks the 20 countries with the highest purchasing power parity in the world in 2024 in ascending order of their GDP (PPP).
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The Country with the Highest Purchasing Power Parity in the World in 2024
1. China
GDP (PPP): $35.29 Trillion
Estimated Share in the Global GDP (PPP): 19.01%
China has the highest purchasing power parity in the world in 2024 and holds a 19.01% stake in the global GDP (PPP) based on purchasing power parity of $35.29 trillion. China is a major global exporter and has invested heavily in infrastructure and technology. China has a population of 1.43 billion and a per capita PPP GDP of $25,020. China is often regarded as the economic miracle of the world and is known for its rapid industrialization, manufacturing capacity, and growing services sector.
Curious to learn about other countries with high purchasing power parities? Check out our report on the 20 Countries with the Highest Purchasing Power Parity in the World in 2024.
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