OECD ranks Israel No. 23 in purchasing power

Israel is ranked 23rd out of 34 OECD member states in terms of purchasingparity (PPP), the Central Bureau of Statistics reported Sunday on the basis of 2011 data. Israel’s GDP per capita is 84 percent of the baseline OECD GDP per capita. Israel is ranked No. 26 out of 50 OECD and EU member states (not all of which are members of the OECD), and its PPP GDP per capita is 91% of the EU average (95% on the basis of the exchange rate). Israel’s PPP GDP per capita is 61% of the US and 67% on the basis of the exchange rate. Israel’s PPP GDP per capita is $31,700, just below New Zealand’s $32,800, Spain’s $33,800 and Italy’s $35,600, but well below Luxembourg’s $93,200, Norway’s $65,000, Switzerland’s $54,200 and the US’s $52,300. The statistics bureau said Israel’s high GDP per capita does not necessarily indicate consumption by households, because GDP also includes other components, such as investment in fixed assets, public consumption and net exports. For example, a country with high investment could have a higher than average GDP per capita, but lower than average household consumption. To compare household consumption between OECD member states, the Central Bureau of Statistics measured “actual individual consumption,” which includes individual consumption and services received directly from the government, such as health and education. PPP actual individual consumption is an index of the material standard of living of households. The index shows actual individual consumption and not just expenditures. The statistics bureau found that Israel’s PPP actual individual consumption was 80% of the OECD average, compared with 77% in Malta, 83% in Greece and 84% in Spain. Countries with actual individual consumption much higher than the OECD average include the US (145%), Luxembourg (124%), Norway (121%) and Switzerland (115%). Conversely, Albania, Bulgaria, Romania and Mexico had an actual individual consumption of less than 50% of the OECD average on a PPP basis. In terms of prices in each country on a PPP basis, compared with the exchange rate, if the PPP is higher than the exchange rate, the value of the country’s currency is less than its market value, and vice versa. This is partly because of price differences for goods and services that are not traded internationally. In countries with a lower PPP than the exchange rate, it is possible to buy goods and services that are not traded internationally for less than in other markets. The CBS found that in Israel in 2011, the exchange was NIS 3.578 per dollar – less than the PPP rate of NIS 3.945 per dollar. This means that it was possible to buy fewer goods and services in shekels compared with other markets.