Thursday, September 28, 2023

UAE Ranks 7th in the World in Per Capita Income

The United Arab Emirates (UAE) has secured the seventh position globally for per capita income, as per the latest data released by the World Bank. In July 2022, the UAE’s per capita income, adjusted for purchasing power parity, reached $87,729. This represents an increase of $10,781 compared to the previous year.

The international dollar is used to compare the purchasing power of different countries. It is based on the US dollar but takes into account the purchasing power of the local currency in each country. The World Bank’s recent update confirms the UAE’s high per capita income rank. It uses the Atlas method, incorporating current US dollar prices. According to this method, the UAE’s per capita income reached $48,950 in 2022, surpassing previous levels. It exceeded the pre-Covid-19 figure of $46,210 and the 2021 level of $43,460.

The Atlas method, employs derived conversion factors to express Gross National Income (GNI) in US dollars. The World Bank classifies economies into four income groups: low income, lower middle income, upper middle income, and high income. These classifications are updated annually in July, based on the per capita income of the previous fiscal year. Various factors such as economic growth, inflation, exchange rates, population growth, and various other contribute to changes in per capita GNI.

According to the current classification, low income countries have a per capita income below $1,135, while lower middle income countries range from $1,136 to $4,465. Additionally, upper middle income countries fall between $4,466 and $13,845, with high-income countries exceeding $13,845. However, these thresholds have been revised upward compared to the previous classification.

Moreover, nearly 80% of countries experienced improvements in per capita GNI in 2022 compared to previous levels. The enhancements are influenced by factors like economic growth, inflation, exchange rates, and population dynamics. Additionally, the World Bank considers the Special Drawing Rights deflator. It accounts for annual inflation adjustments using a weighted average of deflators for gross domestic product in China, Japan, the UK, the US, and the EU.

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