BR ANALYSIS. Romania is already EU’s 9th largest economy if we adjust GDP to price level differences between countries

Romania ranked 9^th last year among the European Union member states in terms of gross domestic product (GDP) in purchasing power standards (PPS), overtaking stronger economies like Sweden or Austria, according to Eurostat data consulted by Business Review.

The purchasing power standard (PPS) is an artificial currency unit that eliminates price level differences between countries, according to Eurostat.

EU’s statistical branch explains that one PPS buys the same volume of goods and services in all countries, allowing meaningful volume comparisons of economic indicators across countries.

Expressing GDP in PPS eliminates differences in price levels between countries, and calculations on a per head basis allows for the comparison of economies significantly different in absolute size.

In 2017, Romania’s GDP in PPS was 368.3 billion, the 9^th highest value in the EU, after Germany (3,068 billion PPS), France (2,092 billion), the UK (2,085 billion), Italy (1,745 billion), Spain (1,290 billion), Poland (804 billion), the Netherlands (658 billion) and Belgium (397 billion).

However, Romania overtakes Sweden (366 billion PPS) or Austria (336 billion), which are usually seen as much larger economies.

Romania is now the 7th largest EU nation in terms of population but ranks only 16th in terms of GDP at current prices – and 27th if we look at the more relevant GDP/capita index, with around EUR 9,600 per inhabitant in 2017.

GDP (gross domestic product) is an indicator for a nation´s economic situation, reflecting the total value of all goods and services produced less the value of goods and services used for intermediate consumption in their production.

In 2017, Romania posted the largest increase in terms of GDP per capita in PPS among the 28 European Union member states and jumped one place in the bloc’s ranking, from the second-poorest nation to the third-poorest, with 63 percent of the EU average.