Global Macroeconomy

Global Macroeconomy

This report forecasts to 2021 and 2025 global population and the following global macroeconomic indicators in real (inflation-adjusted) US dollars: gross domestic product (GDP), per capita GDP, personal consumption expenditures (PCE), manufacturing value added (MVA), and construction expenditures.

Forecasts for population and each macroeconomic indicator are also provided by region in terms of: North America; Western Europe; Asia/Pacific; other regions, spanning Central and South America, Eastern Europe, and Africa/Mideast.

In addition, for the three main regions, each macroeconomic indicator is forecast for the countries with the largest economies within that region.

To illustrate historical trends, world, region, and major country indicators are provided for 2010, 2015, and 2020.

All estimates of gross domestic product and components of GDP are made in terms of constant purchasing power parity in a benchmark year (2019) that is one year before the base year (2020) used in this report. Purchasing power parity GDP estimates for the benchmark year are obtained from the OECD, Eurostat, the World Bank, the International Monetary Fund, the US Central Intelligence Agency, and selected other sources. These purchasing power parity GDP estimates for the benchmark year are based on gross domestic product data expressed in the individual countries’ local currency, which are then converted to US dollars by valuing each country’s output at US prices in the benchmark year. This approach values the same physical output at a consistent price for all countries, thereby reducing the distorting influence of different price levels in the different countries. The alternative approach of using exchange rates to convert local currency GDP to US dollars would tend to overvalue the output of countries with high average price levels and undervalue the output of countries with low average price levels, because exchange rate conversions only partially reflect the relative prices for goods and services that are domestically consumed and invested. Furthermore, factors other than relative prices – such as demand and supply in currency markets, interest rates, and capital flows – affect exchange rates.

Once the GDP values for a country are estimated for the benchmark year, we then calculate inflation-adjusted GDP for all other years for that country based on historical and forecast growth rates of GDP expressed in inflation-adjusted units of that country’s local currency. This approach ensures that the GDP series for any given country is an accurate index of changes in inflation-adjusted GDP for that country. However, it also implicitly assumes that the price structures across countries do not change from those of the benchmark year. Therefore, caution should be used in comparing the relative GDP of countries in years other than the benchmark year. If the ratio of prices across two countries in a given year differs from the ratio of prices across those countries in the benchmark year, then the change in the relative sizes of those two economies as measured will not accurately reflect changes in output.

The benchmark year is chosen to be one year prior to the base year for the report for reasons of data availability. One benefit of that choice is that the ratio of prices across countries in the base year is usually similar to that in the benchmark year. Therefore, the ratio of real GDP between two countries in the base year of 2020 is generally a reasonably accurate representation of the relative sizes of their economies.

A full outline of report items by page is available in the Table of Contents.