4 minute read

By Sergio Montoya (sergio.montoya@oecd.org) and Jarmila Botev (jarmila.botev@oecd.org), OECD Statistics and Data Directorate

To compare macroeconomic indicators across countries, we must adjust for differences in currencies and price levels to ensure we are comparing apples with apples, and not apples with oranges. Purchasing Power Parities (PPPs) are the right tool for this because they are constructed based on prices of a common and comprehensive basket of goods and services, serving both as currency convertors and price deflators. As a result, PPPs are the conversion rates to be used when comparing macroeconomic indicators, such as GDP and price levels, across countries.

The latest “flash” PPP estimates, published on 2 April 2025, point to high cross-country variability in Gross Domestic Product (GDP) per capita in PPPs in 2024. According to these data, GDP per capita varied from around 2.5 times the OECD average to slightly less than half (Figure 1). Luxembourg and Ireland reported the highest GDP per capita in 2024, exceeding twice the OECD average, while Colombia and Mexico reported the lowest, each at around 40% of the OECD average. The gap between the three top performing countries to the OECD average narrowed slightly compared to 2023, but the relative performance of a few countries, notably Austria, Iceland and Finland worsened between 2023 and 2024. 

Figure  1. 2024 Gross Domestic Product per capita, “flash” estimate
Per capita, volume index, OECD=100

Source: OECD PPP detailed results, 2020 onwards database

However, GDP per capita is not the best indicator to compare material well-being across countries. For instance, it is affected by a large share of foreign residents in Luxembourg, the presence of multinationals in Ireland, and the large oil and gas industry in Norway – the top three OECD countries in terms of GDP per capita in 2023.

By contrast, Actual Individual Consumption (AIC) covers the goods and services purchased by households, as well as those provided by the government and non-profit institutions (such as health services or education), making it a better indicator to compare material well-being across countries. The dispersion of AIC per capita in 2023, though still varying across countries, was narrower than that of GDP per capita, ranging from around 50% above the OECD average in the United States to around 45% of the OECD average in Colombia (Figure 2). The average composition of AIC, i.e. the share of goods and services categories, like food and housing, in average OECD consumption remained broadly stable between 2023 and 2022.

Figure 2. 2023 Gross Domestic Product and Actual Individual consumption
Per capita, volume indices, OECD=100

Source: OECD PPP detailed results, 2020 onwards database

PPPs also facilitate the comparison of price levels across countries, i.e. the relative cost of living. For this purpose, it makes sense to look at the basket of goods and services that households purchase themselves, i.e. Household Final Consumption (HFC). HFC price levels across OECD countries in 2023 ranged from around 50% above the OECD average in Switzerland to around 40% of the OECD average in Türkiye (Figure 3). Compared with 2021, there have been relatively large swings in price levels in some countries, such as Japan, Norway, Israel, and Sweden, where price levels relative to the OECD average declined by more than 10 percentage points between 2021 and 2023. On the other hand, the cost of living in Costa Rica and Mexico increased by 10 percentage points or more compared to OECD average between 2021 and 2023. Setting aside the extremes, around half of OECD countries broadly maintained their relative price levels between 2021 and 2023. Nevertheless, this does not mean that prices were stable in these countries, but rather that the price of the overall consumer basket in these countries rose broadly in line with the OECD average.

Figure 3. 2021-2023 Household Final Consumption
Price level index, OECD=100

Source: OECD PPP detailed results, 2020 onwards database

The latest detailed Purchasing Power Parities (PPP) for 2021-2023, broken into 50 analytical categories, were published on 10th February 2025. The flash estimate for GDP per capita for 2024 was published on 2 April 2025.The next release is planned for June 2025, when an estimate of 2024 PPP will be published for GDP, AIC, and Household Final Consumption. The next release of detailed PPP results for 2022-24 is planned for the beginning of 2026.

The Eurostat-OECD PPP Programme The OECD-Eurostat PPP programme computes PPPs for 48 EU and OECD member countries and for associate non-member countries. At present, the OECD part of the programme covers 12 member countries: Australia, Canada, Chile, Columbia, Costa Rica, Israel, Japan, Korea, Mexico, New Zealand, the United Kingdom, and the United States. Given PPPs are derived from a large basket of goods and services, detailed PPP data can only be made available with a considerable lag, meaning that detailed PPPs for 2021, 2022 and 2023 were only made available in February 2025, with 2021 being the final estimate (that will not be revised) and 2022 and 2023 being estimates subject to revision next year. To bridge this publication gap, in March a “flash” estimate PPP for the previous year (i.e. for 2024 in 2025) is published, for GDP PPP only. Find the OECD PPP data here: • in the OECD PPP detailed results, 2020 onwards database; and • in the OECD Annual Purchasing Power Parities and exchange rates database.