I have question

[Malik Alashter]

To my friends? what is the difference between GDP PPP and the GDP nominal and which one is the best for the country as a sign of strong economy thanks for your input.

 

[500]

PPP is GDP adjusted to prices i that country. For example one dollar in India you can buy more than one dollar in US. Thats why India GDP in PPP is higher than nominal.

If you want to compare life standards in countries then better take GDP per capita PPP.

But if u want to compare a share of country in global economy then u need nominal.

 

[TankMan]

Basically, PPP is how much of a local good ,like land or locally produced food, a person can buy in their country, and nominal is roughly how much of an internationally traded good (diamonds, DVD players etc) a person can buy in their country.

So,
PPP = local purchasing power
Nominal = International purchasing power

Developing countries usually have a higher (better) PPP than nominal, while developed countries have higher nominal than PPP.

Nominal shows that the country is strong and capable of buying more goods internationally, so that's what I'd use to measure economic strength.

There's a really long an detailed explanation here if you're interested:
Purchasing power parity

 

[ito]

Both have their cons and pros, and nether is correct. Nominal GDP is the market value of all goods and services produced in US dollar terms. While PPP indicates how much you can buy in your country relative to goods your can buy in other countries for 1 USD. Ex: The exchange rate between PKR and USD is 100. PPP equates how many goods you can buy for 1 dollar in US relative the goods you can buy for PKR 100 in Pakistan.

Nominal GDP is not exactly correct because in Pakistan you won't buy in USD, While PPP is not exactly correct because it is difficult to find comparable baskets of goods to compare purchasing power across countries.

 

[zip]

Both have their cons and pros, and nether is correct. Nominal GDP is the market value of all goods and services produced in US dollar terms. While PPP indicates how much you can buy in your country relative to goods your can buy in other countries for 1 USD. Ex: The exchange rate between PKR and USD is 100. PPP equates how many goods you can buy for 1 dollar in US relative the goods you can buy for PKR 100 in Pakistan.

Nominal GDP is not exactly correct because in Pakistan you won't buy in USD, While PPP is not exactly correct because it is difficult to find comparable baskets of goods to compare purchasing power across countries.

Imported items which are available in local markets too are considered while calculation of gdp in ppp terms ..So for a common man all that matters is gdp in ppp

 

[ito]

Imported items which are available in local markets too are considered while calculation of gdp in ppp terms ..So for a common man all that matters is gdp in ppp

Yes, you are right...PPP is better than Nominal GDP in many ways, but you can calculate Nominal GDP pretty accurately and it is really hard to calculate PPP given that it is hard to come up with relative PPP exchange rate calculations between countries. If PPP is measured accurately, then it is a better measure compared Nominal GDP in measuring economic activity

 

[Malik Alashter]

See these figures for Iraq.

GDP (PPP) 2012 estimate
- Total $242.5 billion[3] (51st)
- Per capita $7,100[3] (114th)

GDP (nominal) 2013 estimate
- Total $229,327 billion[3] (45th)
- Per capita $6,900[3] (83rd)

So the Iraqi ppp is good better than the nominal by 200 bucks

is that good or bad.

 

[ito]

See these figures for Iraq.

GDP (PPP) 2012 estimate
- Total $242.5 billion[3] (51st)
- Per capita $7,100[3] (114th)

GDP (nominal) 2013 estimate
- Total $229,327 billion[3] (45th)
- Per capita $6,900[3] (83rd)

So the Iraqi ppp is good better than the nominal by 200 bucks

is that good or bad.

They are neither good nor bad. They are just different ways of measuring economic activity. They give a rough measure of the ground reality of economic activity as it happening in Iraq. You should know the limitations of each the measure before interpreting the figures.

 

[PRC2025]

what is the difference between GDP PPP and the GDP nominal and which one is the best for the country .

PPP is for domestic purposes. Nominal is more for global purposes.

PPP is very important for people that live within a certain country because prices are not the same everywhere around the world. You get more for 100 dollars in China, India, compared to the U.S. or the UK.

PPP is also very important for a country that produces weapons and defence articles by themselves.

The country that does NOT produce much on their own, has to pay "the nominal price" for imports, which can be considered a "blood price" - meaning, it's extremely expencive.

For example, when Iraq imports weapons from another country, it has to pay "nominal price".

The same goes for the example of Russia, and the Mistral deal (if it ever comes through). The same goes for India. Whatever they import, is extremely expencive for India, since they have to pay "nominal price" - especially given that massive difference between nominal and PPP figures on India's behalf.

Those are just a few examples that are relevant for "Nominal vs PPP" question.