Press Release

[Index]

IMPORTANT CHANGES IN THE UNECE ON-LINE MACROECONOMIC DATABASE

Geneva, 8 April 2008 -- As of today the UNECE has introduced two important changes in its on-line macroeconomic database:

• Change of the base year for time series from 2000 to 2005;
• Revision of the Purchasing Power Parities (PPPs) in line with the recently published 2005 results of the International Comparison Programme (ICP) and the corresponding data series in internationally comparable prices.

The change of the base year is in accordance with the practice in other international organizations. This shift to a more recent base year allows publication of some additional series for countries for which data for 2000 are not available.

The remainder of this note focuses on the background to and impact of the revision of the PPPs.

PURCHASING POWER PARITIES

The revision of the PPPs was done in order to incorporate the recently published 2005 results of the global round of the International Comparison Programme (ICP), which was coordinated by the World Bank. This was the most extensive and thorough effort ever to measure PPPs across countries at the world level. (For more information consult the dedicated ICP website at: www.worldbank.org/data/icp/.)

The PPPs are the rates of currency conversion that equalize the purchasing power of different currencies. They allow simultaneously to revalue GDP in a common currency unit and to eliminate the differences in price levels between countries, so that the resulting estimate is a measure of volume. It is recommended that PPPs, and not exchange rates, be used in international comparisons of GDP and its components, because exchange rates can be affected by factors other than relative domestic price levels. They may not therefore adequately reflect the relative purchasing power of currencies on the national markets. PPPs can be expressed in terms of the currency of any of the countries. The UNECE macroeconomic database uses the US dollar as the base or “numeraire” currency.

The UNECE database provides information on PPPs and GDP aggregates in internationally comparable prices for 52 out of the 56 UNECE member countries. Andorra, Liechtenstein, Monaco and San Marino have not participated in any international comparison programme so far, and therefore no PPPs are available for these countries. In addition, the 2005 ICP round did not provide explicit PPP estimates for Turkmenistan and Uzbekistan. However, using World Bank estimates of GDP per capita in PPP for these two countries, the UNECE secretariat has made imputations in order to calculate the regional aggregates for UNECE-52 and CIS-12.¹

With the introduction of the 2005 ICP benchmark results, the PPP data and the corresponding series in internationally comparable prices have also been revised. It is therefore recommended that users update all corresponding data series downloaded prior to 8 April 2008.

The PPP series for the 27 European Union (EU) countries, the EU candidate countries (Croatia, The former Yugoslav Republic of Macedonia and Turkey), three EFTA countries (Iceland, Norway and Switzerland), two other OECD members (United States and Canada), Albania, Bosnia and Herzegovina, Montenegro, and Serbia, are based on the results of Eurostat/OECD comparisons programmes. The secretariat has made projections using relative deflators of GDP for those countries for which PPPs were not reported by Eurostat/OECD before 2005.

With regard to Israel, the PPP series are those as reported by the Central Bureau of Statistics of Israel.

For the Commonwealth of Independent States (CIS) countries, the PPP data for 2005 are those published by the World Bank with the ICP 2005 global round results. The PPP series for non-benchmark years are estimated by the UNECE secretariat using relative deflators of GDP.

The revision has affected mainly the series for the countries from the CIS and the Western Balkan countries. The reason for this is that the previous UNECE estimates of PPPs for these two groups of countries were based on: (i) benchmark data from the 2000 CIS comparison and (ii) World Bank estimates for the year 2000 for a number of Western Balkan countries.

NEW 2005 PPP Results

GDP Volume Levels

Chart 1 presents GDP per capita in international US$, based on PPPs, for the UNECE countries² and regions¹ in 2005.

GDP per capita varies substantially across countries. The highest volume level is registered for Luxembourg, 180 per cent above the UNECE average, followed by Norway at 90 per cent above the average, and the United States at 67 per cent. On the other hand, the lowest levels are measured for Kyrgyzstan and Tajikistan, where the GDP per capita is less than 7 per cent of the UNECE average. In these countries the GDP per capita volume is much lower than in Luxembourg, the country with the best performing economy, and well below the UNECE level.

It should be noted, however, that indices of GDP per capita (and real GDP) are not suitable for strict ranking of the countries. They can provide only an indication of the relative order of magnitude of economic well-being or economic activity in a country in relation to the others.

Statistical error margins involved in calculating PPPs are such that the results are not sufficiently accurate to allow for strict rankings. In addition, the rankings have to be based on a single year’s data on GDP and population sizes. This is an especially important consideration in view of the fact that the indices for many countries are in close proximity and a small revision in GDP or population data may result in a significant shift in ranking.

Rather than ranking countries, it is preferable to group countries by broad size categories, by geographical area or by political region, even though this also involves a certain degree of arbitrariness. Using this approach, the 52 countries presented on the chart could be divided into five income groups according to their per capita GDP volume index as compared to the UNECE average level (UNECE-52=100) as follows:

• 125 per cent and above: Luxembourg, Norway, United States, Ireland, Iceland, Switzerland, Canada, Netherlands, Austria, Denmark, Sweden, Belgium, United Kingdom;
• between 100 and 124 per cent: Finland, Germany, France, Italy, Spain, Greece;
• between 50 and 99 per cent: Cyprus, Slovenia, Israel, Malta, Czech Republic, Portugal, Hungary, Estonia, Slovakia, Lithuania, Poland, Croatia, Latvia;
• between 25 and 49 per cent: Russian Federation, Romania, Bulgaria, Kazakhstan, Serbia, Belarus, Montenegro, Turkey, The former Yugoslav Republic of Macedonia;
• less than 24 per cent: Ukraine, Bosnia and Herzegovina, Albania, Azerbaijan, Turkmenistan, Armenia, Georgia, Moldova, Uzbekistan, Kyrgyzstan, Tajikistan.

* Excluding Liechtenstein.

Chart 2 presents a picture of the relative size of UNECE economies by region. The contribution of the European Union Member States to the total UNECE-52 GDP corresponds to their population shares. The shares of CIS and the Western Balkan countries in total UNECE-52 GDP is approximately three times less than the part they take in total population, while the regions of North America and the three EFTA countries Iceland, Norway and Switzerland, contribute each 60 per cent more in terms of GDP than they do in terms of population.

* Excluding Liechtenstein.

 

Comparative Price Levels

Comparing the real price levels between countries is also a point of interest in international economic comparisons. Comparative price levels (CPL) are calculated as the ratio between PPP and the corresponding exchange rate. The price level effect is particularly relevant for low income countries, where prices of goods and services for final use are relatively low.

Table 1 presents the GDP price levels of selected UNECE economies compared to the United States. The EFTA countries Iceland, Norway and Switzerland, together with Denmark, which are among the best performing economies, register the highest price levels. On the other hand, the lowest relative prices are estimated for Tajikistan and Kyrgyzstan, where GDP per capita volume levels based on PPP are the lowest among the UNECE countries.

 

Table 1: GDP Comparative Price Levels for Selected Economies, 2005, USA=100

	Country	Comparative price level, %
	Iceland	154
	Denmark	142
	Switzerland	140
	Norway	137
	Ireland	127
	United Kingdom	118
	France	115
	Germany	111
	Canada	100
	United States	100
	Russian Federation	45
	Serbia	41
	Bulgaria	38
	Kyrgyzstan	28
	Tajikistan	24

 

For further information please contact:

Lidia Bratanova
Deputy Director and Chief, Secretariat of CES and National Accounts Section
UNECE Statistical Division
E-mail: [email protected]
Tel: +41 (0)22 917 1772

or

Radoslav Istatkov
Statistician, Secretariat of CES and National Accounts Section
UNECE Statistical Division
E-mail: [email protected]
Tel: +41 (0)22 917 1813

¹ The composition of regions used in the UNECE statistical database is available at: http://w3.unece.org/pxweb/footnotes/composition_of_regions/compositionofregions.htm

² GDP per capita in PPP data for Turkmenistan and Uzbekistan are taken from the World Bank estimates for non-benchmark countries in the 2005 ICP.