Jon Hellevig — Russia Still World’s Sixth Largest Economy (PPP)

Notwithstanding the above, somebody might want to lead you astray and claim that Russia’s economy is only the 13thbiggest at a size of 1.2 trillion. Here’s the catch, the first set of figures is based on the purchasing power parity (PPP) whereas the second awarding Russia’s economy the far lesser size is based on a calculation by the nominal current USD/RUB exchange rate. The Russia bashers will surely want to refer to the latter.

The comparison of the size of the economies across the world on the nominal GDP currency rate is utterly wrong as it only reflects shortsighted speculative differences in the exchange rates. The PPP-method on the contrary determines the size based on the real output of a country. Basically, the method is to compare how much a U.S. dollar fetches in different countries, and then to adjust the nominal GDP with the coefficient thus derived. (As the USD, is the currency of comparison, the nominal GDP and the PPP GDP are by definition always the same for the USA). 

Awara Blog
Russia Still World’s Sixth Largest Economy
Jon Hellevig