What Is Per Capita GDP?

Per capita gross domestic product (GDP) is a metric that breaks down a country’s GDP per person. It is calculated by dividing GDP over a country’s population. GDP per capita is a universal measure globally for gauging the prosperity of nations. Worldwide it is used by economists alongside GDP to analyze the prosperity of a country and its economic growth.

Understanding Per Capita GDP

There can be a few ways to analyze a company’s wealth and prosperity. GDP per capita is the most universal because its components are regularly tracked on a global scale, providing for ease of calculation and usage. Income per capita is also a second alternative for global prosperity analysis though it is less broadly used.

GDP per capita shows how much economic production value can be attributed to each individual citizen. Alternatively, this translates to a measure of national wealth since GDP market value per person also readily serves as a prosperity measure.

GDP itself is the primary measure of a country’s economic productivity. A country’s economic GDP shows the market value of goods and services it produces. In the United States, the Bureaus of Economic Analysis reports GDP every quarter. Economists watch this quarterly report closely for the quarter over quarter and annual growth figures which help analyze the overall health of the economy. Legislators use GDP when making fiscal policy decisions. Central bank economists use GDP as an important factor influencing monetary policy actions.

GDP per capita is often analyzed alongside GDP. Economists use this metric for insight on both their own domestic productivity as well as productivity compared to other countries. GDP per capita considers both a country’s GDP and its population. Therefore, it can be important to understand how each factor contributes to the overall result and how each factor is affecting per capita GDP growth.

Key Takeaways

  • Per capita GDP is a universal measure of national prosperity.
  • Per capita GDP is calculated by dividing GDP over population.
  • Small, rich countries and more developed industrial countries tend to have the highest per capita GDP.

Per Capita GDP Factors

Governments can use GDP per capita to understand how the economy is growing with its population. GDP per capita analysis on a national level can provide insights on a country’s domestic population influence. Overall, it is important to look at each variable’s contribution to understand how an economy is growing or contracting in terms of its people. There can be several numerical relationships that affect per capita GDP.

If a country’s GDP per capita is growing with a stable population level it can potentially be the result of technological progressions that are producing more with the same population level. Some countries may have high GDP per capita but a small population which usually means they have built up a self-sufficient economy based on an abundance of special resources.

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 population growth rates. However, countries with low levels of per capita GDP to begin with – including many nations in Africa – can have rapidly increasing populations with little GDP growth resulting in a steady erosion of living standards.

Global analysis of per capita GDP helps provide comparable insight on economic prosperity and economic developments across the globe. Both GDP and population are factors in the per capita equation. This means countries with the highest GDP may or may not have the highest GDP per capita. Countries may also see a significant increase in GDP per capita as they become more advanced through technological progressions. Technology can be a revolutionary factor that helps countries increase their per capita ranking with a stable population level.

According to World Bank data, global per capita GDP grew by an average of 1.905% in 2018. Economies such as China and India have achieved per capita GDP growth rates well above the global average in the twenty-first century 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.

Per capita GDP shows a country’s economic product value per person. Universally, it is one of the best measures of prosperity.

Per Capita GDP Statistics

Below are the top 10 nations with the highest per capita GDP as of April 2019, according to the International Monetary Fund (IMF).

GDP Per Capita
GDP Per Capita.

Many of the nations in the list have relatively small populations. Luxembourg at the top of the list has one of the smallest populations at 602,000 people. Most of the small population countries are energy exporters, regional financial centers, and export business powerhouses.

The U.S. is one of the world’s largest countries by population but still manages to rank high in per capita GDP. China has the world’s second-largest GDP ($14,220 billion) with the world’s largest population (1.4 billion) leading to a low per capita GDP ranking ($10,150).

Forecasts for Per Capita GDP

The IMF provides a regular outlook on global growth with insights on both GDP and GDP per capita updated in its data mapper. It expects little change in the rankings of the top ten countries as sluggish growth data is trending across the globe.

The IMF expects GDP growth worldwide of 3.2% in 2019 with a slight pickup in 2020 to 3.5%. Trade and technology relations are at the forefront of concerns that could affect the growth of GDP and per capita GDP.

The IMF’s 2019 and 2020 per capita GDP expected rankings include the following:

GDP Per Capita Forecast
GDP Per Capita Forecast.