GDP per capita, consumption per capita and price level indices

Data from 19 June 2024

Planned article update: 17 December 2024

Highlights

In 2023, Luxembourg recorded the highest level of GDP per capita in the EU followed by Ireland, the Netherlands, Denmark and Austria.

Bulgaria had the lowest level of GDP per capita in the EU in 2023, behind Greece, Latvia and Slovakia.

Luxembourg had the highest price level for actual individual consumption in the EU in 2023, Romania the lowest.

Volume indices of GDP per capita, 2023

This article presents the most recent analysis of purchasing power parities and related economic indicators (gross domestic product (GDP) per capita and actual individual consumption (AIC) per capita) for the years 2013-2023, focusing primarily on the latest reference year. It also presents the price level indices of the 27 EU countries, as well as of the three EFTA countries (Iceland, Norway and Switzerland) and six EU candidate countries (Albania, Bosnia and Herzegovina, Montenegro, North Macedonia, Serbia and Türkiye).

Full article

Overview

In 2023, Luxembourg and Ireland recorded the highest levels of GDP per capita in the EU, at 139 % and 111 % above the EU average. Bulgaria was the EU Member State with the lowest GDP per capita, at 36 % below the EU average. Levels of actual individual consumption were somewhat more homogeneous, but still showed significant differences across Europe. Luxembourg recorded the highest level of AIC per capita in the EU, at 38 % above the EU average, as well as the highest price level, at 52 % above the EU average.

Figure 1: Volume indices of GDP and AIC per capita, 2023, (EU=100)
Source: Eurostat (prc_ppp_ind)

Relative volumes of GDP per capita

In international comparisons of national accounts data, such as GDP per capita, it is desirable not only to express the figures in a common currency, but also to adjust for differences in price levels. Failing to do so would result in an overestimation of GDP levels for countries with high price levels, relative to countries with low price levels.

Countries' volume indices of GDP per capita for the years 2013-2023 are shown in Table 1. The dispersion in GDP per capita across the EU Member States is quite remarkable. Luxembourg had the highest GDP per capita among all the 36 countries included in this comparison, in 2023 being well above the EU average (by almost 2.4 times). This is partly explained by the fact that a large number of foreign residents are employed in the country and thus contribute to its GDP, while they are not part of Luxembourg's resident population. Their consumption expenditure is recorded in the national accounts of their country of residence. The high level of GDP per capita in Ireland can be partly explained by the presence of large multinational companies holding intellectual property. The associated contract manufacturing with these assets contribute to GDP, while a large part of the income earned from this production is returned to the companies' ultimate owners abroad.

Table 1: Volume indices GDP per capita, 2013-2023, (EU=100)
Source: Eurostat (prc_ppp_ind)

In 2023, Ireland came second among the EU Member States, at 111 % above the EU average, followed by the Netherlands, Denmark and Austria, each with a GDP per capita of more than 20 % above the average. The EFTA countries Norway, Switzerland and Iceland had a level of GDP per capita of 73 %, 54 % and 34 % above the EU average, respectively.

Belgium, Germany, Sweden, Finland, Malta and France were the other EU Member States with a GDP per capita above the EU average. Italy, Cyprus, Slovenia and Czechia had a level of GDP per capita of less than 10 % below the EU average. Spain, Lithuania, Portugal, Estonia, Poland and Romania had a GDP per capita between 10 % and 20 % below the EU average. The GDP per capita of Hungary, Croatia, the candidate country Türkiye, Slovakia and Latvia was less than 30 % below the average. Greece and Bulgaria had a GDP per capita of less than 40 % below the average. The candidate country Montenegro was placed at 48 % below the EU average, followed by the candidate countries Serbia, North Macedonia, Albania, and Bosnia and Herzegovina.

Table 1 shows a relative stability in the ranking of countries by GDP per capita volume index between 2013 and 2023. Among the EU countries, Luxembourg had the highest volume index over the whole period and Bulgaria the lowest.

Relative volumes of consumption per capita

While GDP is mainly an indicator of the level of economic activity, actual individual consumption (AIC) is an alternative indicator better adapted to describe the material welfare of households.

Countries' volume indices of AIC per capita can be found in Table 2. Generally, levels of AIC per capita are more homogeneous than GDP but still there are substantial differences across the EU Member States.

Table 2: Volume indices AIC per capita, 2013-2023, (EU=100)
Source: Eurostat (prc_ppp_ind)

In 2023, Luxembourg had the highest level of AIC per capita among all 36 countries included in this comparison at 38 % above the EU average. It was followed by the EFTA country Norway, having an AIC per capita of 26 % above the EU average. While Luxembourg and Ireland were outstanding among EU Member States in terms of GDP, this was less so for AIC. As mentioned in the previous section, one reason for this is that cross-border workers contribute to GDP in Luxembourg while their consumption expenditure is recorded in the national accounts of the country of their residence. Ireland, having the second highest level of GDP per capita in the EU, had an AIC per capita of 6 % below the EU average.

As in the case of the volume index of GDP per capita, the ranking of countries in terms of the volume index of AIC per capita shows relative stability between 2013 and 2023. Luxembourg had the highest volume index among the EU countries over the whole period, while Hungary and Bulgaria alternated for the lowest.

Price levels in Europe

Table 3 shows countries' price levels to the right, with the EU average at 100, for AIC only. It also shows the exchange rates applied in the calculation of the price level indices (see methodology described in Data sources). In the following section, the discussion is restricted to the price levels of AIC, since this is closer to the concept of price levels that people are familiar with than a price level indicator based on GDP.

Table showing exchange rates and price level indices for AIC for the euro area, Switzerland, Norway, Iceland, Albania, Bosnia and Herzegovina, Montenegro, North Macedonia, Serbia and Türkiye for the years 2021, 2022 and 2023. The EU is set at 100. Coefficients of variation are also shown for the euro area, the EU and all 36 countries.

Table 3: Exchange rates and price level indices for AIC, 2021-2023, (EU=100)
Source: Eurostat (prc_ppp_ind)

Luxembourg had the highest price level among the Member States, 52 % above the EU average. However, the EFTA countries Switzerland and Iceland had higher price levels, at 84 % and 69 % above the EU average, respectively. The EFTA country Norway and the EU Member States Ireland, Denmark, Finland, the Netherlands and Sweden had price levels more than 20 % above the EU average. Belgium, Austria, Germany and France were the other EU Member States with price levels above the EU average.

Italy, Spain, Estonia, Cyprus, Malta and Slovenia had a price level less than 10 % below the EU average, followed by Portugal, Greece, Czechia, Latvia and Slovakia at less than 20 % below the EU average. Lithuania and Croatia had a price level situated less than 30 % below the EU average, followed by Hungary, Poland and the candidate country Serbia with price levels less than 40 % below that average. The candidate countries Albania and Montenegro, followed by EU Member State Bulgaria, candidate country Bosnia and Herzegovina and EU Member State Romania had price levels between 40 % and 50 % below the EU average. The candidate countries North Macedonia and Türkiye had price levels at 53 % and 62 % below the EU average, respectively.

Exchange rates are crucial in determining price levels, and consequently exchange rate movements often have a big impact on the development of price levels over time. In fact, several of the major price level changes observed between 2021 and 2023 can be at least partly explained by fluctuations of a country's currency against the euro. In 2022 and 2023, the national currency of Türkiye showed a large depreciation against the euro. Czechia showed the largest increase in price levels between 2021 and 2023.

The last three rows in Table 3 show the coefficients of variation of the price levels for three groups of countries: the euro area (EA-20), the EU Member States (EU) and the entire group of 36 countries (All 36). A time series of these coefficients can be interpreted as a rudimentary price convergence indicator.

These figures show that, firstly, and unsurprisingly, the price dispersion was much less pronounced in the euro area than in the EU as a whole and in the 36-country group (which can be partially impacted by the volatility of exchange rates). Secondly, over this 3-year period, price levels slightly converged for all 36 countries.

Data sources

The data in this article are produced by the Eurostat-OECD Purchasing power parities programme. The full methodology used in the programme is described in the Eurostat-OECD Methodological manual on purchasing power parities.

Purchasing power parities (PPPs) are currency conversion rates that are applied in order to convert economic indicators from national currency to an artificial common currency, called the Purchasing Power Standard (PPS), which equalises the purchasing power of different national currencies and enables meaningful volume comparisons between countries. For example, if the GDP or AIC per capita expressed in the national currency of each country participating in the comparison is divided by its PPP, the resulting figures neutralise the effect of differences in price levels and thus indicate the real volume of GDP or AIC at a common price level. When divided by the nominal exchange rate of a given year, the PPP provides an estimate of the price level of a given country relative to, for instance, the EU total.

PPPs are established on an annual basis. According to the regular publication calendar, PPPs are released as preliminary estimates 12 months after the end of the reference year and revised after 24 months, while the final results are released 36 months after the end of the reference year. In addition, an early estimate of PPPs, partly based on projections, is published 6 months after the end of the reference year. This regular PPP revision and release calendar is in line with the data delivery timetable for national accounts data as given in the ESA 2010 Regulation 549/2013 of 21 May 2013. Thus, the 2021 results presented in this publication should be regarded as final, while the 2022 and 2023 results are still preliminary.

In their simplest form PPPs are nothing more than price relatives that show the ratio of the prices in national currencies for the same good or service in different countries. For example, if the price of a hamburger in Sweden is 28.60 Swedish krona and in Italy it is €2.76, the PPP for hamburgers between Sweden and Italy is 28.60 krona to €2.76 or 10.36 krona to the euro. In other words, for every euro spent on hamburgers in Italy, 10.36 krona would have to be spent in Sweden in order to obtain the same quantity and quality – or volume – of hamburgers.

The indices of relative volumes of GDP and AIC per capita published in this article have been adjusted for price level differences, and are expressed in relation to the European Union average (EU=100). Thus, for instance, if a country's volume index is below 100, that country's level of GDP (or AIC) per capita is lower than for the EU as a whole. The price level adjustment factors, referred to as purchasing power parities, can also be used in comparison of countries' price levels.

Price level indices (PLIs) as presented in this publication are the ratios of PPPs to exchange rates. They provide a measure of the differences in price levels between countries by indicating for a given product group the number of units of common currency needed to buy the same volume of the product group or aggregate in each country. They are presented relative to the European Union average: if the price level index is higher than 100, the country concerned is relatively expensive compared with the EU average and vice versa. The EU average is calculated as the weighted average of the national PLIs, weighted by the expenditures corrected for price level differences.

Volume and price level indices are not intended to rank countries strictly. In fact, they only provide an indication of the order of magnitude of the volume or price level in one country in relation to others, particularly when countries are clustered around a very narrow range of outcomes. The level of uncertainty associated with the basic price and national accounts data, and the methods used for compiling PPPs imply that differences between countries that have indices within a close range should not be over-interpreted.

In national accounts, Household Final Consumption Expenditure (HFCE) denotes expenditure on goods and services that are purchased and paid for by households. Actual Individual Consumption (AIC), on the other hand, consists of goods and services actually consumed by individuals, irrespective of whether these goods and services are purchased and paid for by households, by government, or by non-profit organisations. In international volume comparisons, AIC is often seen as the preferable measure, since it is not influenced by the fact that the organisation of certain important services consumed by households, like health and education services differs a lot across countries. For example, if dental services are paid for by the government in one country, and by households in another, an international comparison based on HFCE would not compare like with like, whereas one based on AIC would.

Context

GDP per capita volume indices (on a regional basis - see Economy at regional level) are used in the allocation of cohesion policy funds within the EU. Funding is concentrated on less developed regions, with the goal of reducing economic, social and territorial disparities.

Eurostat is co-operating closely with other international institutions in the production and dissemination of PPPs. It co-operates with the OECD to produce PPP statistics for the OECD countries and with the World Bank and the International Monetary Fund (IMF) to produce global PPP data. See external links below.