GDP Per Capita: Definition, Uses, and Highest Per Country

What Is GDP Per Capita?

Gross domestic product (GDP) per capita is an economic metric that breaks down a country's economic output to a per person allocation. Economists use GDP per capita to determine the prosperity of countries, based on their economic growth.

GDP per capita is calculated by dividing the GDP of a nation by its population. Countries with a higher GDP per capita tend to be those that are industrial, developed countries and countries with smaller populations compared to others.

Understanding GDP Per Capita

Gross domestic product per capita is a global measure used by economists to gauge the prosperity of nations based on economic growth.

There are a few ways to analyze a country’s wealth and prosperity. GDP per capita is the most universal because its components are regularly tracked on a global scale, providing ease of calculation and usage. Income per capita is another measure for global prosperity analysis, though it is less broadly used.

The most basic interpretation of GDP per capita shows how much economic production value can be attributed to each individual citizen. Alternatively, GDP per capita translates to a measure of national wealth since GDP market value per person also readily serves as a prosperity measure.

GDP Per Capita vs. GDP

GDP itself is the primary measure of a country's economic productivity. A country's GDP shows the market value of goods and services it produces. In the United States, the Bureau of Economic Analysis (BEA) reports GDP every quarter.

Economists watch this quarterly report closely for the quarter-over-quarter and annual growth figures that can assist them in analyzing the overall health of the economy. They also use GDP for insight into how their domestic productivity compares to the productivity of other countries.

Legislators use GDP figures when making fiscal policy decisions. GDP can also influence central bankers when they are deciding on the course of future monetary policy.

GDP per capita is often analyzed alongside GDP. It relates to both a country's GDP and its population. Therefore, it can be important to understand how each factor affects GDP per capita growth.

Implications of GDP Per Capita

Governments can use GDP per capita to understand how their economies are growing along with their populations. GDP per capita analysis on a national level can provide insights into a country’s domestic population influence.

It is important to look at each variable’s contribution to the per capita figure to understand how an economy is growing or contracting relative to its population. There can be several numerical relationships that affect GDP per capita.

If a country’s GDP per capita is growing while the population level remains stable, that growth potentially can be the result of technological advances that increase productivity with no change in population. In fact, technology can be a revolutionary factor that helps countries increase their per capita rankings even as population figures are unchanged or decline.

Some countries may have high GDP per capita but a small population. This usually means that they have built up a self-sufficient economy based on an abundance of special resources.

Negative GDP Per Capita

A nation may have consistent economic growth but if its population is growing faster than its GDP,  GDP per capita growth will be negative. This is not a problem for most established economies, as even a tepid pace of economic growth can still outpace their population growth rates.

However, countries with existing low levels of GDP per capita (such as nations in Africa) and rapidly increasing populations combined with little GDP growth can experience a steady erosion of living standards.

GDP and Population Growth

Both GDP and population are factors in the per capita equation. This means that countries with the highest GDP may or may not have the highest GDP per capita.

According to the latest World Bank data, global GDP per capita increased by an average of 2.3% in 2022.

Economies such as those of China and India have achieved GDP per capita growth rates well above the global average in the 21st century despite their populations of over a billion people apiece. This is thanks to the financial reforms initiated by China in the late 1970s and India in the mid-1990s.

Countries With the Highest GDP Per Capita

Here are the 10 countries with the highest GDP per capita in 2024, according to the International Monetary Fund (IMF).

Many of the countries on the list have relatively small populations. Luxembourg, at the top of the list, has one of the smallest populations, with about 660,000 people in 2023. Most of the small population countries are energy exporters, regional financial centers, and export business powerhouses.

Countries With the Lowest GDP Per Capita

Here are the 10 countries with the lowest GDP per capita in 2024, according to the IMF.

Global Growth Projections

The IMF provides a regular outlook on global growth of GDP. The growth of GDP can affect the outlook for the growth of GDP per capita.

It expects global GDP growth of 3.1% in 2024 and 3.2% in 2025. The projection is slightly higher than the projection the IMF provided in October 2023, due to the resilience of the U.S. economy and many large emerging market and developing economies.

The 2024/2025 projection, however, is lower than the 3.8% annual average global growth from 2000 to 2019. The reasons given by the IMF include higher interest rates set by central banks as they continue to fight inflation, withdrawals of fiscal support because of high debt weighing on economic activity, and low underlying productivity in growth.

While advanced economies should see much slower rates of GDP growth, emerging market and developing economies are expected to see the highest rates of growth. If populations remain stable, this expected GDP growth should boost GDP per capita levels in these countries.

The Bottom Line

GDP per capita is a popular metric used to measure the average prosperity and well-being of a country. Unlike some other measures of economic productivity, it takes populations into account, allowing easy comparisons between countries with different sized populations.