Per Capita GDP

A country’s Gross Domestic Product (GDP) per person is obtained by dividing its GDP for a particular period by its average population for the year.

GDP refers to the total value of final (as opposed to interim, or work-in-progress) goods and services produced within a country’s borders during a specific calendar period such as quarterly or annually. While GDP is the most widely used measure of a country’s economic activity, per capita GDP is a better indicator of a nation’s living standards since it adjusts for population.

Per capita GDP serves as an informal measure of a nation’s prosperity; the ranks of the richest nations by this metric are dominated by affluent countries with relatively small populations and disproportionately large economies. “Per capita GDP” and “GDP per capita” are synonymous.

As of October 2018, these are the 25 nations and entities (including the Macao and Hong Kong Special Administrative Regions) with the highest per capita GDP. The figures below are from the IMF's World Economic Outlook (October 2018) Dataset.

GDP Per Capita (PPP*) as of October 2018

*International dollars per capita

Source: IMF DataMapper    

Most of the nations in this list have relatively small populations, the only exceptions being the United States (2017 population: 325.7 million) and Germany (82.7 million). With the world's largest economy and third-largest population, the Unites States stands out as a giant among these powerful minnows, with most of the others in the Top 12 comprising energy exporters, regional financial centers and export/business powerhouses.

A nation may have consistent economic growth, but if its population is growing faster than its GDP,  per capita GDP growth will be negative. This is not a problem for most advanced economies, as their tepid pace of economic growth can still outpace their extremely low population growth rates. But it is a major issue for countries with low levels of per capita GDP to begin with – including a number of nations in Africa – where rapidly increasing populations have resulted in a steady erosion of living standards.

According to World Bank data, global per capita GDP grew by an average of 1.88% annually from 1961 to 2017. Over this period, the global economy expanded at an average pace of 3.52% annually, while the world's population increased by an average of 1.61% per annum.

Major developing economies such as China and India have achieved per capita GDP growth rates well above the global average, despite their populations of over a billion people apiece, thanks to the financial reforms initiated by China in the late 1970s and India in the mid-1990s.

China's economy grew at about 5% annually from 1961 to 1977; from 1978 to 2017, growth surged to an annual pace of about 9.6%, almost double the pace of the prior period. China's per capita GDP tripled over these six decades, from a 2.8% annual pace in the 1961-1977 period, to over 8.5% annually in the 1978-2017 period.

Likewise, India's economic growth accelerated from a 4.25% annual pace in the 1961-1993 period, to 7.0% annually in the 1994-2017 period, as financial reforms and deregulation had a positive impact on the economy. Per capita GDP almost tripled, from 1.93% annually in the 1961-1993 period to 5.35% annually in the 1994-2017 period.

In November 2012, the Organization for Economic Cooperation and Development (OECD) released long-range forecasts for GDP and per capita GDP growth in a report titled "Looking to 2060: Long-term global growth prospects." According to the report, rapid growth in China and India would make their combined GDP (measured at 2005 PPP rates) surpass that of the G7 nations within the next few decades and exceed that of the entire OECD membership (currently 36 nations) by 2060. Productivity gains would be the biggest driver of growth in both developed and emerging economies. The report noted that major emerging economies that have lower productivity at present - such as China, India, Indonesia, and Brazil - would experience faster productivity growth than developed economies due to technology adoption and better business governance.   

The report forecast that the convergence in productivity would be matched by a trend of converging GDP per capita between developing and emerging economies. Per capita GDP was estimated to double (in 2005 PPP terms) in the richest economies over the 2011 to 2060 period, but more than quadruple in the poorest economies. China and India were forecast to experience more than a seven-fold increase in per capita income by 2060, although living standards would continue to lag the developed economies. The report also projected that the rankings of per capita GDP in 2060 would remain very similar to the 2011 rankings.