- Gross domestic product (GDP) per capita quantifies a country’s economic output per person and is determined by dividing a country’s GDP by its population.
- Per capita GDP is a global measure of a country’s prosperity that economists use in conjunction with GDP to assess a country’s prosperity based on its economic growth.
- The highest per capita GDP is found in small, wealthy countries and more developed industrial countries.
What does GDP per capita imply?
Per-capita GDP (constant LCU) The definition is long. Gross domestic product divided by midyear population equals GDP per capita. Gross domestic product (GDP) at purchaser’s prices is the sum of gross value contributed by all resident producers in the economy, plus any product taxes, minus any subsidies not included in the product value.
What is the formula for calculating GDP per capita?
How Is GDP Per Capita Calculated? GDP per capita is calculated by dividing a country’s gross domestic product (GDP) by its population. This figure represents a country’s standard of living.
Is a high or low GDP better?
Gross domestic product (GDP) has traditionally been used by economists to gauge economic success. If GDP is increasing, the economy is doing well and the country is progressing. On the other side, if GDP declines, the economy may be in jeopardy, and the country may be losing ground.
What are the five wealthiest countries in terms of GDP?
What are the world’s largest economies? According to the International Monetary Fund, the following countries have the greatest nominal GDP in the world:
What is the significance of GDP per capita?
Gross Domestic Product (GDP) per capita is the abbreviation for Gross Domestic Product (GDP) per capita (per person). It is calculated by simply dividing total GDP (see definition of GDP) by the population. In international markets, per capita GDP is usually stated in local current currency, local constant currency, or a standard unit of currency, such as the US dollar (USD).
GDP per capita is a key metric of economic success and a helpful unit for comparing average living standards and economic well-being across countries. However, GDP per capita is not a measure of personal income, and it has certain well-known flaws when used for cross-country comparisons. GDP per capita, in particular, does not account for a country’s income distribution. Furthermore, cross-country comparisons based on the US dollar might be skewed by exchange rate movements and don’t always reflect the purchasing power of the countries under consideration.
For the last five years, the table below illustrates GDP per capita in current US dollars (USD) by country.
Are you looking for a forecast? The FocusEconomics Consensus Forecasts for each country cover over 30 macroeconomic indicators over a 5-year projection period, as well as quarterly forecasts for the most important economic variables. Find out more.
Which country is the most powerful in the world?
In the 2021 Best Countries Report, Canada wins the top overall rank as the world’s number one country for the first time. After coming in second place in the 2020 report, Canada has now eclipsed Switzerland in the 2021 report, with Japan, Germany, Switzerland, and Australia following closely behind.
How much debt does America have?
“Parties in power have built up the deficit through increased spending and poorer tax collection, regardless of political affiliation,” says Brian Rehling, head of Global Fixed Income Strategy at Wells Fargo Investment Institute.
While it’s easy to suggest that a specific president or president’s administration led the federal deficit and national debt to move in a given direction, it’s crucial to remember that only Congress has the power to pass legislation that has the greatest impact on both figures.
Here’s how Congress responded during four major presidential administrations, and how their decisions affected the deficit and national debt.
Franklin D. Roosevelt
FDR served as the country’s last four-term president, guiding the country through a series of economic downturns. His administration spanned the Great Depression, and his flagship New Deal economic recovery plan aided America’s rebound from its financial abyss. The expense of World War II, however, contributed nearly $186 billion to the national debt between 1942 and 1945, making it the greatest substantial rise to the national debt. During FDR’s presidency, Congress added $236 billion to the national debt, a rise of 1,048 percent.
Ronald Reagan
Congress passed two major tax cuts during Reagan’s two administrations, the Economic Recovery Tax Act of 1981 and the Tax Reform Act of 1986, both of which reduced government income. Between 1982 and 1990, Congress passed Acts that reduced revenue as a percentage of GDP by 1.7 percent, resulting in a revenue shortfall that contributed to the national debt rising 261 percent ($1.26 trillion) during his presidency, from $924.6 billion to $2.19 trillion.
Barack Obama
The Obama administration oversaw both the Great Recession and the recovery that followed the collapse of the mortgage market throughout his two years in office. The Economic Stimulus Act of 2009, which pumped $831 billion into the economy and helped many Americans avoid foreclosure, was passed by Congress in 2009. When passed by a strong bipartisan vote, congressional tax cuts added extra $858 billion to the national debt. During Obama’s two terms in office, Congress increased the national deficit by 74% and added $8.6 trillion to the national debt.
Donald Trump
Congress approved the Tax Cuts and Jobs Act in 2017, slashing corporate and personal income tax rates, during his single term. The cuts, which were seen as a bonanza for the wealthiest Americans and corporations at the time of their passage, were expected by the Congressional Budget Office to increase the government deficit by $1.9 trillion at the time of their passing.
The federal deficit climbed from $665 billion in 2017 to $3.13 trillion in 2020, despite the Treasury Secretary’s prediction that the tax cuts would reduce it. Some of the rise was due to tax cuts, but the majority of the increase was due to successive Covid relief programs.
The public’s share of the federal debt has risen from $14.6 trillion in 2017 to more than $21 trillion in 2020. The national debt is made up of public debt and intragovernmental debt (amounts owed to federal retirement trust funds such as the Social Security Trust Fund). It refers to the amount of money owed by the United States to external debtors such as American banks and investors, corporations, people, state and municipal governments, the Federal Reserve, and foreign governments and international investors such as Japan and China. The money is borrowed in order to keep the United States running. Treasury banknotes, notes, and bonds are included. Treasury Inflation-Protected Securities (TIPS), US savings bonds, and state and local government series securities are among the other holders of public debt.
“The national debt is growing at a rate it hasn’t seen in decades,” says James Cassel, chairman and co-founder of Cassel Salpeter, an investment bank. “This is the outcome of the basic principle of spending more money than you earn.” Cassel also points out that while both major political parties have spoken seriously about reducing the national debt at times, discussions and strategies have stopped.
When both sides pose discussing raising the debt ceiling each year, the national debt is more typically utilized as a bargaining chip. The United States would default on its debt obligations if the debt ceiling was not raised. As a result, Congress always votes to raise the debt ceiling (the maximum amount of money the US government may borrow), but only after parties have reached an agreement on other legislation.
Who will emerge as the next great power?
China is regarded as a prospective superpower or an emerging superpower. According to some observers, China will overtake the United States as the world’s superpower in the next decades. China’s 2020 GDP was $14.7 trillion, the world’s second-highest. It is also the world’s most populous country and the second-largest in terms of landmass. Despite the fact that China’s defense spending is much lower than the United States’ ($252 billion), it is still the world’s second-highest. Furthermore, China is expanding its diplomatic reach, rising to become one of the world’s major contributors to the economy, and driving technological advancements, particularly in artificial intelligence (AI) and green technology.
However, China must overcome a number of critical roadblocks. It has a vast population, but it is quickly elderly and undereducated, with more than two-thirds of its employees possessing a high school diploma. The sheer quantity of Chinese people puts a constant demand on the country’s resources, and pollution and starvation are persistent issues. Because of its extensive corruption and willingness to sacrifice economic progress and the personal advancement of its population in order to preserve control, the Chinese government is frequently identified as a growth impediment.
What exactly is a low GDP?
When GDP falls, the economy shrinks, which is terrible news for businesses and people. A recession is defined as a drop in GDP for two quarters in a row, which can result in pay freezes and job losses.