Brazil Becomes World’s 6th Largest Economy with Twice China’s Per Capita GDP

Rua das Flores (Flowers Street) in Curitiba, Paraná, Brazil A new study by the World Bank shows that Brazil has risen from the seventh to the sixth position among the largest economies in the world. The International Comparison Program (ICP) compared the size of the economies of 146 countries.

The document shows that Brazil answers to half of the South American economy. According to the report, Brazilian governmental expenses answer to two thirds of the governmental expenses in the region.

The research is based on figures for 2005, when all the riches produced worldwide totaled US$ 55 trillion. The text says that 40% of all products and services came from developing countries.

According to the World Bank, a change in the evaluation formula permitted the elevation of Brazil and other nations.

As the main system for comparison, the report used purchasing power parity (PPP), which permits evaluation in the local currency, and not simply through the conversion of the local currency to the dollar.

"Through purchasing power parity it is possible to compare the size of the market, the structure of the economies and what money can buy," says the World Bank report.

The document places the United States in first and China in second. In third place come Japan, Germany in fourth and India in fifth. Brazil is in the sixth place, in the same position as the United Kingdom, France, Russia and Italy. Spain and Mexico were in the seventh place.

Following the new parameters, the United States, China, Japan, Germany and India together answer to almost half of the world economy.

India Downsized

According to the new data, India's GDP in PPP terms was US$ 2.34 trillion in 2005 and in nominal dollar terms was US$ 778.7 billion.

Prior to the revision, India's GDP in PP terms was 3.8 trillion in 2005 and had grown to over 4 trillion in the current year. As a result of the revisions, India's share in global GDP in 2005, which has also been revised downwards from more than 68 trillion in the earlier estimates to just under 55 trillion, came down sharply from 6.2% to 4.3%.

This would make India the world's fifth largest economy in 2005 behind the US (which accounted for 22.5% of the global GDP), China (9.7 %), Japan (7.0%) and Germany (4.6%). In the earlier estimates, India was a comfortable fourth, well ahead of Germany and close behind Japan.

PPP is an apples-to-apples comparison of buying power in different countries taking into account price differences. The Bank said the new data was based on a study in which India participated for the first time since 1985 and China for the first time ever.

The earlier estimates were therefore based on data that was outdated or incomplete or both.

For the new study, which the Bank said was the most extensive and thorough effort ever to measure PPPs across countries, teams in each region identified characteristic goods and services to be priced.

Surveys conducted during 2005 collected prices for more than 1,000 goods and services to arrive at the new numbers. All previous PPP estimates were extrapolated from other figures, the Bank said.

The revised estimates also downsized China's economy, although it remained the second largest economy behind the US. China's economy under the new metrics was 5.3 trillion US dollars in PPP in 2005 terms against the 8.8 trillion estimated earlier.

Its share of world GDP came down from 14.5% in the earlier estimates to 9.7% in the latest figures.

One interesting fall-out of the revised estimates is that they dilute India's and China's demand for increased voting weight at the World Bank and IMF based on their economic size under the old PPP figures.

Although there has been a consensus in the Bank-Fund that PPP should be taken into account to determine voting muscle, the latest results are a setback for the Asian giants in terms of potential voting clout.

The revised estimates show that between them the US, China, Japan, Germany and India (the five largest economies) account for nearly half of the world's GDP as measured by PPPs. The BRIC countries (Brazil, Russia, China and India) now account for almost exactly 20% of global GDP against the earlier estimate of close to 26%.

The revised figures mean that per capita GDP in PPP terms in India is down to US$ 2,126 just over half the figure of 4,091 for China. Brazil has a per capita PPP GDP that is more than twice that of China at 8,605 and Russia's number is 11,866 showing the very wide range of levels of affluence within the BRIC countries.

These are by far the poorest among the 10 biggest economies, with even sixth ranked Italy having a per capita GDP in terms of PPP of almost 28,000 US dollars and the US at 41,670 heading the list within these 10.



  • Show Comments (6)

  • Andys

    To the English guy who said: England, which is supposedly tied with Brazil???? ..
    No, this World Bank study doesn’t place England at 6th place along Brazil in the largest economies…it places the United Kingdom ( England Wales Scotland Nothern Ireland), if you count England as its own, England would lower down moron…

  • fho

    Other thing, why in the hell are you using an iPod as referential? For crying out loud, this is really a narrow mentality. Why would somebody think that people need an iPod to be seen as “developed”? Oh consumerism!

  • fho

    The fact is that this is pure jealousy! Fear of having your place being take by those countries… Brazil, China etc. Accept it, the world is changing and so is its global economy! Get over it.

  • bo

    I agree with you Ch.C…
    but then how do you justify this study? I simply can’t imagine those countries tied with brazil, and even some that come after brazil, being more expensive while being so difficult to earn money. Matter of fact, I know they’re not. England, which is supposedly tied with Brazil????

    That is funny.

  • ch.c.

    “Through purchasing power parity it is possible to compare the size of the market, …….
    …..the structure of the economies and what money can buy,”

    Interesting to note that your PPP is increased…..while most goods sold are higher than in developed countries in which the PPP is…..reduced…for comparison pupose.
    Simple example within many :
    In Brazil the Ipod cost US$ 329.- when your average income in the six metroplotian regions is around US$ 600.-
    (Brl 1100.- or so) Or around 55 % % of an average income.
    In developed countries it doesnt cost more than around US$ 200.- but with a far higher average income.
    Or around 5 % of an average income.

    Similar conclusion could be made for buying a car, a mobile, a PC

    Then how could anyone explain that your PPP is increased and reduced in developed countries ?

    If this is not stat manipulation, then what is it ????

    Ohhh and I have been fair because I have not used the minimum wage of US$ 200.- in Brazil, US$ 1600.- in France, or US$ 3000.- in -Switzerland.

    And worse than that : a minimum of 25′ % of the population in Brazil doesnt even earn this minimum of US$ 200.- .
    Because then the Ipod cost at least TWO TO THREE monthly wages !!!!

    You could even do a similar study….on the mortgage rates ! Much higher in Brazil than in USA, France, Switzerland and even China, Thailand, Japan, Chile etc etc.
    Rate differential much higher in Brazil than anywhere else on earth….when adjusted for inflation.

  • bo

    I’ve seen this report…
    and one could say that Brazil is in either 6th place, or 10th, as they’re tied with 4 other countries. I would be interested in seeing the GDP numbers converted in dollars.

    I also wonder if they take into consideration the taxes that are levied in each country, hence the end costs to the consumer.

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