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Russia has become the fifth largest economy in the world: what does this mean and how it affects the lives of Russians

Date: July 19, 2024 Time: 23:15:02

Russia has become the fifth largest economy in the world and the largest in Europe in terms of gross domestic product (GDP), calculated in purchasing power parity (PPP).

Photo: Timur Sharipkulov

Do you want good news? We’ve got them. The World Bank found that by 2022 Russia became the fifth largest economy in the world and the largest in Europe in terms of gross domestic product (GDP), calculated in purchasing power parity (PPP). What does this mean? PPP measures the value of a country’s consumption basket in a particular currency. In this case, the experts counted in US dollars. It turned out that the first place was taken by China (by the way, it has been leading for a long time), the United States is in second place, Russia is in fifth. See “Top 10” for details.

Georgy Ostapkovich, director of the Center for Market Research at the Institute for Research Statistics and Knowledge Economy at the Higher School of Economics, did his best to explain, as they say, on his fingers why this rating is needed and what is its meaning. . for the common people of the country.

– GDP is the main economic indicator that reflects the cost of goods and services created in the country, – Georgy Ostapkovich started from the basics. – It is considered mainly in nominal terms: the value in money of the goods created in the country in one year. But there is another account – by purchasing power parity. Because it is necessary? Currencies are different in different countries. In the US, the dollar, we have, the ruble. And the consumption basket costs differently. Conventionally, in the American basket, a man’s haircut is valued at $ 10 (940 rubles at today’s exchange rates). And in Russia, on average, 350-400. They have a hamburger – $3 (280 rubles), ours – 130-140 rubles. That is, the purchasing power of the dollar in Russia is much higher than in its home country. This means that you can buy more goods for $10 in Russia than in the United States. And the GDP of different countries can be calculated simply by taking into account purchasing power.

By the way, in terms of nominal GDP, our country ranks 12th in the world. And in terms of GDP in PPP in 2022, we managed to overtake Germany, moving from 6th to 5th place. As Georgy Ostapkovich explained to kp.ru, this was due to a sharp drop in the average annual dollar exchange rate. Remember, in July 2022, it was about 51 rubles to the dollar.

“However, as a PPP indicator, it is rarely used in calculations and is partly mistrusted,” explains the expert. – Because it does not reflect the exact value of the goods and services created. For example, each country has annual inflation. In the US last year it was 6%. This means that the dollar should also fall 6%, but this is not taken into account when calculating PPP.

Top 10 countries in terms of GDP, calculated in purchasing power parity

1. China $30.3 billion

2. 25.5 billion US dollars

3. India $11.9 billion

4. Japan $5.7 billion

5. Russia $5.3 billion

6. Germany $5.3 billion

7. Indonesia $4.0 billion

8. Brazil $3.8 billion

9. France $3.8 billion

10. UK $3.7 billion

According to World Bank data for 2022.

* This website provides news content gathered from various internet sources. It is crucial to understand that we are not responsible for the accuracy, completeness, or reliability of the information presented Read More

Puck Henry
Puck Henry
Puck Henry is an editor for ePrimefeed covering all types of news.
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