Price level ratio of PPP conversion factor (GDP) to market exchange rate
Definition: Purchasing power parity conversion factor is the number of units of a country's currency required to buy the same amount of goods and services in the domestic market as a U.S. dollar would buy in the United States. The ratio of PPP conversion factor to market exchange rate is the result obtained by dividing the PPP conversion factor by the market exchange rate. The ratio, also referred to as the national price level, makes it possible to compare the cost of the bundle of goods that make up gross domestic product (GDP) across countries. It tells how many dollars are needed to buy a dollar's worth of goods in the country as compared to the United States. PPP conversion factors are based on the 2011 ICP round.
Description: The map below shows how Price level ratio of PPP conversion factor (GDP) to market exchange rate varies by country. The shade of the country corresponds to the magnitude of the indicator. The darker the shade, the higher the value. The country with the highest value in the world is The Bahamas, with a value of 1.28. The country with the lowest value in the world is Azerbaijan, with a value of 0.22.
Source: World Bank, International Comparison Program database.
Statistical Concept and Methodology: The ratio of the PPP conversion factor to the market exchange rate - the national price level or comparative price level - measures differences in the price level at the gross domestic product (GDP) level. The price level index tends to be lower in poorer countries and to rise with income.