Why global GDP might be US$7 trillion bigger than everyone thought

MANY people have experienced the joy of finding some spare change down the back of the sofa. On May 30, the World Bank experienced something similar, if on a grander scale. After rooting around in 176 countries, it discovered almost US$7 trillion in extra global gross domestic product – equivalent to an extra France and a Mexico.

In fact, there may be a better analogy. What the World Bank discovered was not additional money to spend, but the equivalent of a discount voucher, which cuts 4 per cent off the price of every good and service the world buys in a year. That means global spending can stretch further than previously thought.

To understand why, it helps to carry out a thought experiment.