"GfK Purchasing Power Europe" Study Shows Rising Income Despite Economic Uncertainty

 




The recently updated "GfK Purchasing Power Europe 2011/2012" study reveals the regional distribution of the population's purchasing power in 42 European countries. Prospects for the disposable income available to Europe's households in 2011 continue to be optimistic despite the current debt crisis and economic slowdown in the second half of the year.

According to the results of the "GfK Purchasing Power Europe 2011/2012" study, European consumers have approximately €8,500 billion available for consumer purchases (e.g., retail, traveling) or saving in 2011. This corresponds to an average purchasing power of €12,774 per inhabitant for the 42 countries studied. Taking into account the upward adjusted 2010 numbers for many countries, a purchasing power growth rate of 3.1 percent is expected this year in the 42 countries under review.

However, a growth rate of only 2.3 percent is expected for the 15 long-standing EU member countries; the upward trend is mostly driven by the new member states and EU candidate countries or partner countries, particularly Turkey and the Ukraine, whose high number of inhabitants and high growth boost the growth rate for all of Europe.

Regional purchasing power distribution in selected countries

Norway: Prosperity apparent in purchasing power level

With a 2011 per capita purchasing power of €29,028, Norway comes in third in the purchasing power rankings behind Liechtenstein and Switzerland. The just under 5 million inhabitants of Norway thus have more than twice as much purchasing power as the average among the 42 countries reviewed. Norway's high ranking is in part a reflection of an exchange rate-related phenomenon: The positive revaluation of the Norwegian krone against the euro contributes to the increase in purchasing power when this value is expressed in euros.

The wealthiest district in the country - Oslo - is also the most populated. The around 600,000 inhabitants of the capit
al have a 2011 per capita purchasing power of €33,481. A comparison with districts of a similar size underscores the degree of affluence in Oslo: Inhabitants of the urban district of Düsseldorf in Germany have over 41 percent less money at their disposal than their counterparts in Oslo. Only six German districts have a per capita purchasing power that exceeds that of the poorest district in Norway.

Norway's most affluent municipality is Bærum, a suburb to the west of Oslo. Inhabitants of this municipality are regarded as the country's wealthiest: The just under 113,000 inhabitants have an average per capita purchasing power of €37,209 – one and a half as much as inhabitants of Erlangen, Germany.

The regions with the highest purchasing power are clustered around Oslo and Stavanger, while municipalities in the country's interior are comparatively far less well off. These also often correspond to municipalities that have experienced a more or less continuous decline in population in recent years. Even so, inhabitants of Norway's "poorest" municipality have an average of €22,275 at their disposal.

Portugal and Croatia: New insights thanks to 2011 census
In compliance with an EU ordinance, a census was carried out in 2011 in all EU member states, some results of which have already been evaluated. A comprehensive population survey was carried out in Portugal and Croatia. At the time of calculating the purchasing power, results related to inhabitants and households were available.

The number of inhabitants on a national level has decreased in comparison to the previous year's value, which was based on a forward projection (moderately in Portugal at -0.8 percent and significantly in Croatia at -3.1 percent); however, the number of households has increased (significantly in Portugal at +3.9 percent and by +2 percent in Croatia).

A regional comparison of the numbers in both countries shows that the deviations from the previous year's values significantly increase as the size of the regional level decreases. These results reflect the dynamic regional development and emphasize the importance of regularly carrying out a census and having an up-to-date data basis. Due to the fact that Croatia does not officially carry out forward projections of its population figures on the municipal level, there are in some cases significant discrepancies between the census results and the calculated results from the previous year – e.g., the number of inhabitants in the city of Pula in Istria sinks by almost one third. These drastic discrepancies naturally affect the purchasing power total for the individual regions in question.

With a per capita purchasing power of €10,608, Portugal has a middling ranking among the 42 countries under review, closely behind Slovenia. With a per capita purchasing power of €5,011, Croatia leads the Balkan countries (excluding Slovenia) and ranks third among the EU candidate countries, just behind Iceland and Turkey.

The capital city district of Lisbon is far and away the district in Portugal with the highest per capita purchasing power. Here the per capita purchasing power is €24,049 - almost 2.3 times as high as the national average. Ranking just behind is Porto - the country's second-largest city - and the neighboring districts, Oeiras and Cascais, whose inhabitants have 1.7 to 1.5 times as much purchasing power as the national average.

Almost one fourth of Croatia's purchasing power is concentrated in the urban district of Zagreb; the approximately 800,000 inhabitants of the capital city are around 30 percent wealthier than the national average. With a per capita purchasing power of €6,507, these inhabitants have around half of the purchasing power available to the average European. The approximately 350,000 inhabitants of the neighboring Slovenian capital city of Ljubljana have twice as much per capita purchasing power; the 500,000 inhabitants of the Lisbon district have on average almost four times as much.

The purchasing power of the urban district of Zagreb is closely followed by the district of Istria. By contract, the districts along the Dalmatian coast have below average purchasing power. Due to its very high number of inhabitants, the district of Split is home to around ten percent of the country's disposable income. The poorest districts are located in the country's interior along the border with Serbia and Bosnia.

Ukraine and Poland – UEFA European Football Championship hosts
The Ukrainian economy has been gradually recovering from the last global market crisis. This can be seen in the 2011 increase in per capita purchasing power to €1,761. Among the countries under review, only the Ukraine can boast a two-digit growth rate (based on the revised figures). However, this ranking must be put into context: The Ukraine remains second-to-last in the country rankings in terms of per capita purchasing power. Ukrainians have on average twice as much per capita purchasing power as inhabitants of Moldova, but only 30 percent of the average purchasing power available to the inhabitants of Poland.

Polish households are also profiting from a dynamic economic situation: The country's per capita purchasing power has grown more than that of any of the EU 27 countries. Even so, with a per capita purchasing power of €6,050, Poles have less than 60 percent of the average purchasing power available to inhabitants of Portugal.

The opening match of the UEFA European Championship will take place in the Polish capital of Warsaw, whose per capita purchasing power of €10,266 makes it by far the wealthiest urban district in the country. Inhabitants of Warsaw have almost 70 percent more money at their disposal than the national average. This equates to almost three times as much as the average amount available to inhabitants of the capital of the Ukraine.

Along with the Ukrainian capital, which is to host the final match of the 2011 UEFA European Football Championship, three additional Ukrainian cities will host the upcoming games: Charkiw, Donezk and Lemberg. All of these cities have a comparable level of purchasing power - around 40 percent below the average available to inhabitants of Kiev. Donezk, the most industrialized area of the country, has a per capita purchasing power that is 35 percent higher than the national average. Charkiw, the fourth largest district in the country, has an above-average level of per capita purchasing power, but even so, it is the "poorest" of the other cities that will be hosting the UEFA European Football Championship matches.

The three other Polish locations hosting matches are among the country's ten wealthiest and largest districts and have a purchasing power level around 80 percent of that available in the capital. Posen, the Polish district with the least amount of purchasing power that will be hosting matches, has a per capita purchasing power of just under €8,000, which is around 60 percent of the European average.



About the study
Purchasing power is a measure of per capita disposable income (including any received state benefits) after the deduction of taxes. The study indicates annual per capita purchasing power levels in euros and as an index value. GfK purchasing power values correspond to the nominally available income - i.e., the values are not adjusted for inflation and do not reflect regional price variations. The basis of calculation is data on income tax as well as statistics on government benefits and forecasts by economic institutes. The total purchasing power values reflect the disposable income from which inhabitants can draw for consumer purchases and monthly fixed costs such as rent, utilities, mortgage payments, contributions to private retirement funds and insurance policies as well as miscellaneous expenditures such as those related to vacations or transportation.

GfK Purchasing Power Europe is calculated every year for 42 European countries, with coverage down to the level of municipalities and postcodes. The 2011/2012 dataset is available immediately, with up-to-date coverage of the latest administrative and postcode boundaries as well as data on inhabitants and households. GfK GeoMarketing also offers digital maps for all of Europe that fit perfectly with the market datasets.

Internationally active companies require precise information regarding the amount of disposable income available to the population of countries and regions. GfK Purchasing Power Europe thus comprises an indispensable resource for international sales and expansion planning, branch network optimization and controlling.

Additional information
on GfK Purchasing Power Europe can be found at www.gfk-geomarketing.com/purchasing-power.

About GfK GeoMarketing
GfK GeoMarketing is one of the largest providers of geomarketing services in Europe for customers and users from all branches of trade. Key business areas include:

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GfK GeoMarketing is a subsidiary of the globally active GfK Group. Ranked fourth among the world's market research institutes, the GfK is represented in more than 100 countries by over 11,000 employees.