The World's Richest and Poorest Countries

WHAT DOES IT MEAN FOR A NATION TO BE RICH? 

What do we mean when we apply terms like “richest” and “poorest” to entire countries? If one simply considers gross domestic product (GDP)—the total value of goods and services produced within each nation—then the richest five countries in the world are, in order, the United States, China, Germany, Japan and the UK. Yet those rankings don’t tell us much about relative living conditions.

Similarly, the poorest five are, in order, Tuvalu, Nauru, Kiribati, the Marshall Islands, and Palau. These countries yield little in annual production largely because they are so very very small—no more than dots in the Pacific Ocean on a world map. Again, aggregate numbers don’t tell us much about living conditions. 

A more accurate picture of living conditions begins with dividing the total production by the number of people, to look at GDP per capita. Per capita GDP tells a little more about how much wealth might be available to each individual person. Still, what about currency fluctuations? Or the varying cost of necessary items such as food, clothing and shelter? To know whether a country’s citizens are wealthy, we want to understand how much they are able to buy. Thus, a final adjustment factors in purchasing power.

Our tables of the World's Richest and Poorest Countries for 2016 use IMF data for per capita GDP, adjusted for purchasing power parity (PPP). GDP-PPP makes for a better comparison of living standards, because PPP takes into account cost of living and inflation rates, rather than just exchange rates, which may distort the real differences in income. This is the measure most economists prefer for comparing living conditions and economic strength across countries.

Values are expressed in current international dollars, to the nearest whole dollar, reflecting a single year's (2018) currency exchange rates and PPP adjustments.

Source: International Monetary Fund, World Economic Outlook October 2018.