Economics: PPP (purchasing power parity)

Self-tutoring about economics: the tutor mentions purchasing power parity (PPP).

If one looks up the gdp per capita of Brazil, one might see it at around 9258 USD. However, its GDP per capita, PPP, is 19018 USD. Why the difference?

PPP means to reflect the actual purchasing power in the local market. Therefore, while the Brazilian worker’s wages might be around 9250 USD, it goes further in Brazil than it would in the US: the 9250 USD, in Brazil, buys what 19018 USD would in the US.

In many cases, a country’s GDP per capita, PPP, will be elevated compared to its GDP per capita. However, it can work in reverse: Switzerland’s GDP per capita is around 90K USD while its GDP per capita, PPP, is only about 82K USD.

Source:

tradingeconomics.com/brazil/gdp

tradingeconomics.com/switzerland/gdp-per-capita

YouTube: Expert Program Management: Purchasing Power Parity Explained