The biggest world economies by purchasing power

The fashion industry seems to be obsessed with China. Miuccia Prada has mined the country and culture for creative inspiration, while Versace has opened stores in Shanghai, Beijing and Hong Kong and now wants to expand into secondary cities. Meanwhile, companies such as L’Oréal view Russia as a growth opportunity. Based on purchasing power parity (PPP), Russia and China look like good bets. But underneath the strong PPPs are two economies with fundamental problems that must be addressed for sustained economic growth. Note: PPPs are theoretical exchange rates that take into account the cost of living differences between countries. For example, most goods and services are cheaper in China than they are in the U.S. As a result, $1,000 will be "worth" more to the Chinese consumer than one in the U.S. To reflect this difference, the OECD* calculates PPPs on the basis of periodic price comparisons and national inflation figures around the world. PPP estimates are usually shown on a scale of 1 to 100, where the U.S. is 100. They are multiplied by a country’s gross domestic product per head.

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