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21549
High GDP per capita despite high price level
statistikk
2005-01-12T10:00:00.000Z
Prices and price indices
en
ppp, Comparison of price levels in Europe, gross domestic growth, volume index, personal consumption, price level adjusted GDP, price level index, EU countries, EEA countries, international comparisonsConsumer prices , Prices and price indices
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Comparison of price levels in Europe, 2003, preliminary figures

Variants of the statistics:

  • Annually, preliminary figures (selected)
  • Annually

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High GDP per capita despite high price level

As in previous years, Norway's price level in 2003 was among the highest in Europe - 30 per cent above the average of the 15 countries then comprising the EU, but only marginally higher than in Denmark. At the same time, Norway's Gross Domestic Product (GDP) per capita, adjusted for differences in price levels among countries, was 35 per cent above the EU average.

These are among the results from the European Purchasing Power Survey 2003, which surveys the price level of 31 European countries and applies these indicators to calculate a "price level adjusted GDP per capita". In addition to the preliminary 2003 figures, Eurostat has released final results for 2002. In this article, we will focus on the 2003 results, since experience has shown that the preliminary figures rarely deviate substantially from the final ones.

Price levels highest in Switzerland, Norway and Denmark

Switzerland, Norway and Denmark had the highest price levels in Europe in 2003, approximately 30 per cent above the average of the former EU15. Iceland and Sweden also had high relative price levels, whereas Finland was more in line with the European average, at approximately the same level as Germany. In most of the Central and Eastern European countries that have later acceded to the EU, price levels were about half the EU15 average. However, even within the "old" EU of 15 members, price level differences among the countries were substantial: The price level of Portugal and Greece made up just about 60 per cent of Denmark's price level in 2003.

The overall picture remains the same even if we focus exclusively on goods and services for Actual Individual Consumption. Norway and Switzerland come out on top, with a relative price level 39 per cent above the European average, followed by Denmark and Iceland. Finland, Sweden and Ireland also stand out with a high price level of consumer goods and services.

The product groups that display a particularly high price level in Norway are alcoholic beverages and tobacco, hotels and restaurants, transportation, food and non-alcoholic beverages, as well as the product group "other goods and services". The latter comprises, among other things, goods and services for personal care, furthermore jewellery, watches and travel goods, and a variety of personalised services.

Relative price levels for GDP and
Actual Individual Consumption.
2003. EU15=100
  GDP Actual Individual
Consumption
Belgium 99                            100
Bulgaria 34 34
Denmark  128  133
Estonia 55 52
Finland  108  118
France  102  101
Greece 77 77
Ireland  114  119
Iceland  122  128
Italy 95 98
Cyprus 88 89
Latvia 46 46
Lithuania 46 44
Luxembourg  111  109
Malta 65 66
Netherlands  104  101
Norway  130  139
Poland 47 46
Portugal 75 77
Romania 35 33
Slovakia 46 43
Slovenia 72 72
Spain 84 81
United Kingdom  101  100
Switzerland  133  139
Sweden  116  118
Czech Republic 51 48
Turkey 49 47
Germany  107  108
Hungary 54 51
Austria  102  104
Source:  Eurostat.

Price level adjusted GDP per capita: Luxembourg on top, Norway number two

Norway's price level is high, but so is the level of income. In 2003, the country's GDP per capita was 35 per cent above the EU15 average, even when differences in price levels among countries have been taken into account. As in previous years, Luxembourg came out on top in Europe, again partly due to the fact that a high proportion of its employees live in neighbouring countries and thus contribute to the domestic economy without being included in the resident population. Luxembourg is followed by Norway, Ireland, Switzerland and Denmark. Finland and Sweden were 4 and 6 percent above the EU average, respectively.

GDP per capita, price level adjusted, 2003. EU15=100

Co-variation between relative price levels and price level adjusted GDP per capita. 2003

Even though the price level in most of the new EU member countries is low compared to the "old" EU15, these countries' GDP per capita, adjusted for price level differences, is generally well below the EU15 average. In 2003, only Cyprus, Malta and Slovenia reached a level of GDP per capita comparable to Portugal or Greece. In Poland and the three Baltic republics, price level adjusted GDP per capita was between 38 and 45 per cent of the EU15 average, but still well ahead of Bulgaria, Romania and Turkey. Compared to figures for previous years' , most of the poorest countries participating in the survey seem to be catching up to some extent, though slowly.

In international comparisons, it can frequently be observed that high price levels and high income levels go hand in hand. The chart, which is based on the 2003 figures from the European Purchasing Power Survey, illustrates this point. Each dot in the chart represents a country, whereas price level adjusted GDP per capita is measured along the horizontal and relative price levels along the vertical axis.

It is important to keep this in mind when interpreting the results of the European Purchasing Power Survey. A country's relative price level as such does not give any indication of the inhabitants' material standard of living, but should preferably be related to a measure of income, like GDP.

More figures can be found on Eurostat's statistics database ' New Cronos .'