• Internationally comparable data are crucial to forming sustainable policies and monitoring progress.
• Market exchange rates give misleading comparisons because they do not reflect purchasing power differences.
• Purchasing Power Parities account for price differences between countries and so measure real quantities. Such quantitative measurements will reveal not only structural compositions of economic activities, but also price, volume and value indices that would reflect levels of performances and productivities of production factors of the trading economies. This will effectively enhance and upgrade comparative analysis.

What is ICP?

The International Comparison program (ICP) is a global statistical initiative aimed at estimating Purchasing Power Parities (PPP) that are used to convert Gross Domestic Product (GDP) and its components from national currency denominations into a common international currency unit at an equal price level. Prior to the ICP, official exchange rates were generally used to convert GDP to a common currency, but exchange rates are not suitable for this purpose as they do not correct for international price level differences. They are also subject to short-term fluctuations which are unrelated to the underlying volumes of goods and services produced and consumed in each country. For comparisons of international debt positions and foreign trade, the exchange rate will usually be the more appropriate conversion factor, but for comparisons of real domestic volumes of product, relative price levels and hence the purchasing power of currencies must be taken into account. PPP-based economic data inform users about the relative sizes of markets, the size and relative shares of key components of GDP, and the purchasing power of currencies.