India moved past Japan to become third-largest economy in purchasing power: World Bank

India rose through the ranks to become the third-largest economy globally in 2011, edging past Japan in terms of purchasing power parity (PPP), as per a data released by the International Comparison Program (ICP) of the World Bank. The US and China continue to occupy the top two slots.

India's share in world GDP in terms of PPP was 6.4 per cent in 2011 compared with China's 14.9 per cent and the US' 17.1 per cent, according to the ICP report.

PPP-based data help compare economic parameters across nations taking into account the prices of similar products in different countries.

The report said that the six largest middle income economies – China, India, Russia, Brazil, Indonesia and Mexico – account for 32.3 per cent of world GDP, whereas the six largest high income economies – United States, Japan, Germany, France, United Kingdom and Italy – account for 32.9 per cent.

Asia and the Pacific, including China and India, accounts for 30 per cent of world GDP, Eurostat-OECD 54 per cent, Latin America 5.5 per cent (excluding Mexico, which participates in the OECD and Argentina, which did not participate in the ICP 2011), Africa and Western Asia about 4.5 per cent each.

China and India make up two-thirds of the Asia and the Pacific economy, excluding Japan and South Korea, which are part of the OECD comparison while South Africa, Egypt and Nigeria account for about half of the African economy, it added.

“At 27 per cent, China now has the largest share of the world’s expenditure for investment (gross fixed capital formation); followed by the United States at 13 per cent. India, Japan and Indonesia follow with 7 per cent, 4 per cent, and 3 per cent, respectively,” according to the report.

China and India account for about 80 per cent of investment expenditures in the Asia and the Pacific region.

The report said half of the world’s 12 largest economies were in the middle income category (based on the World Bank’s definition). When combined, the 12 largest economies account for two-thirds of the world economy, and 59 per cent of the world population.

The PPP-based world GDP amounted to $90.65 trillion compared with $70.29 trillion measured by exchange rates.

Middle income economies’ share of global GDP is pegged at 48 per cent when using PPPs and 32 per cent when using exchange rates. Also, low income economies, as a share of world GDP were more than two times larger based on PPPs than respective exchange rate shares in 2011. Yet, these economies accounted for only 1.5 per cent of the global economy, but nearly 11 per cent of the world population.

The report said the most expensive economies in GDP terms are Switzerland, Norway, Bermuda, Australia and Denmark. The US ranked 25th in the world, lower than most other high-income economies, including France, Germany, Japan and the UK.

The cheapest economies are Egypt, Pakistan, Myanmar, Ethiopia and Lao People's Democratic Republic.

The five economies with the highest GDP per capita include Qatar, China, Luxembourg, Kuwait and Brunei. The US has the 12th highest GDP per capita.

(Edited by Joby Puthuparampil Johnson)

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