The percent of the world’s economy that the nominal GDP of the top 10 economies add up to.
The top 20 economies in the world…..
1. United States
Nominal GDP: $19.39 trillion
GDP (PPP): $19.39 trillion
The U.S. has retained its position of being the world’s largest economy since 1871. The size of the U.S. economy was at $19.39 trillion in 2017 in nominal terms and is expected to reach $20.41 trillion in 2018. The U.S. is often dubbed as an economic superpower and that’s because the economy constitutes almost a quarter of the global economy backed by advanced infrastructure, technology, and abundance of natural resources. While the U.S. economy is service-oriented, contributing almost 80% its GDP, it’s manufacturing merely contributes about 15% of its output.
When the economies are assessed in terms of purchasing power parity, the U.S. loses its top spot to its close competitor China. In 2017, the U.S. economy, in terms of GDP (PPP) was at $19.39 trillion while the Chinese economy was measured at $23.16 trillion. The gap between the size of the two economies in terms of nominal GDP is expected to lessen by 2023; the U.S. economy is projected to grow to $24.53 trillion by 2023 followed closely by China at $21.57 trillion.
Nominal GDP: $12.01 trillion
GDP (PPP): $23.15 trillion
China has experienced exponential growth over the past few decades, breaking the barriers of a centrally planned, closed economy to evolve into a manufacturing and exporting hub of the world. China is often referred to as the “world’s factory” given its huge manufacturing and export base. However, over the years, the role of services has gradually increased and that of manufacturing as a contributor to GDP has declined relatively. Back in 1980, China was the seventh-largest economy with a GDP of $305.35 billion while the size of the U.S. then was $2.86 trillion. Since it initiated market reforms in 1978, the Asian giant has seen an economic growth averaging 10% annually. In recent years, the pace of growth has slowed although it remains high in comparison to its peer nations.
The World Bank reported a spurt in China’s economic growth in 2017 for the first time since 2010, mainly driven by a cyclical rebound in global trade. It projects a growth of 6.6% in 2018 which would sober down to around 5.5% by 2023. Over the years, the difference in the size of the Chinese and the U.S. economy has been shrinking rapidly. In 2017, the Chinese GDP in nominal terms stood at $12.01 trillion, lower than the U.S. by $7.37 trillion. In 2018, the gap is expected to reduce to $6.32 trillion and by 2023 the difference would be of $2.96 trillion. In terms of GDP in PPP, China is the largest economy with a GDP (PPP) of $23.15 trillion. By 2023, China GDP (PPP) would be $37.06 trillion. China’s huge population brings down its GDP per capita to $8,643.11 (seventy-second position).
Nominal GDP: $4.87 trillion
GDP (PPP): $5.42 trillion
Japan is the third-largest economy in the world with a GDP of $4.87 trillion in 2017. The economy is expected to cross the $5 trillion mark in 2018. The financial crisis of 2008 rocked the Japanese economy and it’s been a challenging time for its economy since then. The global crisis triggered a recession followed by weak domestic demand and huge public debt. When the economy was beginning to recover, it suffered a massive earthquake which hit the country socially and economically. While the economy has broken the deflationary spiral, economic growth remains muted.
Its economy will get some stimulus with the 2020 Olympics which keep the investment flow strong which is backed by a lax monetary policy by the Bank of Japan. The nominal GDP of Japan is $4.87 trillion which is expected to move up to $5.16 trillion in 2018. Japan slips to the fourth spot when GDP is measured in terms of PPP; GDP (PPP) was $5.42 billion in 2017 while its GDP per capita was $38,439.52 (25th spot).
Nominal GDP: $3.68 trillion
GDP (PPP): $4.17 trillion
Germany is not just Europe’s largest economy but also the strongest. On the global scale, it is the fourth-largest economy in terms of nominal GDP with a $3.68 trillion GDP. The size of its GDP in terms of purchasing power parity is $4.17 trillion while its GDP per capita is $44,549.69 (17th place). Germany was the third-largest economy in nominal terms in 1980 with a GDP of $850.47 billion.
The nation has been dependent upon capital good exports which suffered a setback post-financial crisis of 2008. The economy grew by 1.9% and 2.5% in 2016 and 2017 respectively. However, IMF has revised growth downwards to 2.2% and 2.1% respectively in 2019 and 2020 given the threat of rising protectionism and Brexit. To revise its manufacturing strength in the current global scenario, Germany has launched Industrie 4.0 — its strategic initiative to establish the country as a lead market and provider of advanced manufacturing solutions.
5. United Kingdom
Nominal GDP: $2.62 trillion
GDP (PPP): $2.91 trillion
The United Kingdom, with a $2.62 trillion GDP is the fifth-largest economy in the world. When compared in terms of GDP PPP, UK slips to the ninth spot with a GDP (PPP) of $2.91 trillion. It ranks 23rd in terms of GDP per capita which is $39,734.59. Its nominal GDP is estimated at $2.96 trillion during 2018, but its ranking is expected to slide to the seventh spot by 2023 with a GDP of $3.47 trillion.
Starting from 1992 until 2008, the economy of the UK witnessed an uptrend in each quarter. However, it witnessed a decline in its output for consecutive five quarters starting April 2008. The economy shrunk by 6% during these five quarters (between the first quarter of 2008 and the second quarter of 2009) and eventually took five years to grow back to the pre-recession levels, according to data from the Office of National Statistics. The economy of the UK is primarily driven by the services sector which contributes more than 75% of GDP with manufacturing, the second prominent segment followed by agriculture. Although agriculture is not a major contributor to its GDP, 60% of the U.K.’s food needs are produced domestically, even though less than 2% of its labor force is employed in the sector.
Nominal GDP: $2.61 trillion
GDP (PPP): $9.45 trillion
India is the fastest-growing trillion-dollar economy in the world and the sixth-largest with a nominal GDP of $2.61 trillion. India is poised to become the fifth-largest economy overtaking the United Kingdom by 2019 as per the IMF projection. The country ranks third when GDP is compared in terms of purchasing power parity at $9.45 trillion. When it comes to calculating GDP per capita, India’s high population drags its nominal GDP per capita down to $1,982. The Indian economy was just $189.438 billion in 1980, ranking 13th on the list globally. India’s growth rate is expected to rise from 6.7% in 2017 to 7.3% in 2018 and 7.5% in 2019, as drags from the currency exchange initiative and the introduction of the goods and services tax fade according to IMF.
India’s post-independence journey began as an agrarian nation, however, over the years the manufacturing and services sector has emerged strongly. Today, its service sector is the fastest-growing sector in the world, contributing to more than 60% to its economy and accounting for 28% of employment. Manufacturing remains as one of its crucial sectors and is being given due push via the governments’ initiatives such as “Make in India”. Although the contribution of its agricultural sector has declined to around 17%, it still is way higher in comparison to the western nations. The economy’s strength lies in a limited dependence on exports, high saving rates, favorable demographics, and a rising middle class.