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Overall, the results show that the size of the world economy measured in PPP terms is smaller than previously estimated. Asia’s economies are one-third smaller than previously thought, largely because of the downgrades to China and India, while Africa’s are one-fourth smaller. The report has no bearing on the actual size of these economies, but rather looks at them with a different measuring tool. Many of these countries want the International Monetary Fund to take PPP into consideration when allocating voting s rights.

When measured by market exchange rates instead of PPP, China’s share of world GDP is just 5%, and India’s is less than 2% - about half of their size using PPP. That explains why the report may have political ramifications as fast-growing emerging markets fight for more say at the IMF. Emerging markets argue that the big industrialised countries have too much influence over the fund, in part because voting rights do not take into account PPP - something they hope will change in the IMF’s revised quota system.

The data shows that the world economy produced goods and services worth almost $55 trillion in 2005 and that almost 40 per cent of the world’s output came from developing economies. Carried out with the World Bank and other partners, the preliminary global report provides estimates of internationally comparable price levels and the relative purchasing power of currencies for 146 economies.

The estimates are based on purchasing power parities (PPPs) benchmarked to the year 2005. PPPs are used instead of exchange rates to convert national economic measures such as gross domestic products into a common currency. By taking into account price differences between countries, PPPs allow comparisons of market size, the structure of economies, and what money can buy.

Analysts believe that the findings of the report could have political ramifications in the influential voting system largely determined by buying power of economies, of multi-lateral funding agencies, including the International Monetary Fund.The GDP of high-income economies accounts for 61 per cent of the world economy, received by only 16% of the world’s population. Compared with previous estimates, the relative size of developing economies has decreased by 7 percentage points or one-sixth. 

THE WORLD GDP 1