Ranked: Countries with the Largest Economies

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The world is experiencing a period of unprecedented economic growth. As the global financial crisis subsides and economies recover, countries are focused on their own national growth while eyeing potential expansion into other markets. National economies are growing, but which country’s economy is the largest? Let’s find out.

But before we go ahead, the following are some terms you must get yourself familiar with:

GDP

GDP stands for gross domestic product and is one of the primary indicators used to measure the health of a country’s economy. It represents the total dollar value of all goods and services produced over a specific period. Often referred to as the size of the economy, GDP is used to compare the productivity levels of different countries. The US, China, and Japan are currently the largest economies in the world.

GDP can be measured on an annual basis or quarterly.

Nominal GDP

Nominal GDP is the most common way of looking at a country’s economic production. This method uses current market prices to measure the value of all goods and services within a nation’s borders.

The per capita nominal GDP is the total value of goods and services produced divided by the population. While nominal GDP measures economic output in current dollars, real GDP removes the effects of inflation to better gauge economic growth or contraction.

PPP GDP

PPP stands for Purchasing Power Parity. PPP GDP is a measure of the total value of all goods and services produced in a country valued at prices prevailing in the United States. Essentially, it’s the value of everything that a country produces, adjusted for how expensive things are in that country.

Top 10 Countries with the Largest Economies

Ranked Countries with the Largest Economies

1. United States 

  • GDP – Nominal: $20.89 trillion 
  • GDP Per Capita: $63,413
  • GDP – Purchasing Power Parity (PPP): $20.89 trillion 

Background of the many american one hundred dollar banknotes

The United States has an economic output of $18.5 trillion a year, making it the largest economy in the world. America’s largest trading partners are China, Canada, and Mexico. The United States is one of the largest exporters in the world and enjoys a trade surplus with many countries, including Australia and the United Kingdom.

The US has a highly diversified, world-leading industrial sector. It is a high-technology innovator with the second-largest industrial output in the world. The US dollar is the most commonly used currency in international transactions and is the world’s foremost reserve currency, backed by the United States’ science, technology, and well-developed infrastructure.

2. China

Multi exposure of virtual abstract financial graph interface on Chinese flag and sunset sky background

  • GDP – Nominal: $14.72 trillion
  • GDP Per Capita: $10,434
  • GDP – Purchasing Power Parity (PPP): $17,204

The Chinese economy is one of the fastest-growing economies of the twenty-first century. It is now the world’s second-largest economy, with a GDP of $14.72 trillion. The support for using the Chinese Renminbi for settlements has increased as China’s Belt and Road Initiative effectively merges its foreign and economic policies. 

In the global economy, the country is becoming increasingly prominent. Since the financial crisis of 2008, it has been the leading contributor to global growth. China is getting stronger day by day – the credit goes to their hard work. 

3. Japan 

Japanese ten thousand yen banknote

  • GDP – Nominal: $5.06 trillion 
  • GDP Per Capita: $39,048
  • GDP – Purchasing Power Parity (PPP): $5.24 trillion 

Japan’s four main islands – Honshu, Hokkaido, Shikoku, and Kyushu, account for almost 98 percent of the country’s land area. It boasts the world’s third-largest nominal GDP and fourth-largest purchasing power parity economy (PPP).

Japan is the world’s largest electronic products producer and the third-largest vehicle manufacturer. In addition, Japan is regarded as one of the most inventive countries on the planet. The country normally has a surplus in terms of annual trade and overseas investment. The workforce in the country is highly qualified and skilled; they are guided very well and can understand things soon because of a strong listening level, which has been established to be beneficial to organizational growth. All of these elements combine to make Japan one of the most prosperous countries in the world. 

4. Germany 

Euro banknotes and coins in front of the national flag of Belgium

  • GDP – Nominal: $3.85 trillion 
  • GDP Per Capita: $45,466
  • GDP – Purchasing Power Parity (PPP): $4.45 trillion 

Germany has the world’s fourth-largest GDP. The combined value of exports and imports accounts for 86.9% of GDP. Moreover, Germany is renowned for its top-notch service sectors, such as telecommunications, healthcare, and tourism – they all are the main drivers of its economy.

The country has a social market economy that emphasizes the benefits of free-market capitalism while simultaneously ensuring a variety of social services. Because of its talented labor force, well-developed infrastructure, and technological competence, the country is ranked second in the world for entrepreneurship. [1]

5. United Kingdom 

Stock market investment trading financial, coin and United Kingdom England flag or Forex

  • GDP – Nominal: $2.76 trillion
  • GDP Per Capita: $39,229
  • GDP – Purchasing Power Parity (PPP): $2.98 trillion  

England, Wales, Scotland, and Northern Ireland make up the United Kingdom (UK), sometimes known as the United Kingdom of Great Britain and Northern Ireland. In terms of GDP, it is the world’s fifth-largest economy and the second largest in Europe. 

The service sector dominates the national economy, contributing around 80% of GDP; the financial services industry is particularly important, and London is the world’s largest financial center. However, the British manufacturing sector has declined as a share of the economy, while foreign ownership has increased. The automotive industry is a significant part of the UK manufacturing sector and employs over 800,000 people, with a turnover of some £52 billion, generating £26.6 billion of exports. [5]

6. India 

Indian currency and gdp word spelled

  • GDP – Nominal: $2.66 trillion 
  • GDP Per Capita: $1,877
  • GDP – Purchasing Power Parity (PPP): $8.68 trillion 

The Republic of India is a federal democratic republic with 29 states and seven union territories. It is the world’s largest democracy and the sixth-largest economy. India’s manufacturing, technology, and service industries are all successful. The rate of foreign direct investment (FDI) inflows to India has been steadily increasing since 2014, thanks to various major policy measures implemented by the government to encourage this increase. As a result, India will become one of the top three countries in terms of GDP in the 2030 forecast. [2]

Reforms to remove bottlenecks in important business fields, lower the minimum capital required, and simplify getting relevant permits are among the strategic actions made to refresh India’s economic environment.

7. France 

France Economy Improves and Returns to Normal After Crisis

  • GDP – Nominal: $2.63 trillion 
  • GDP Per Capita: $39,257
  • GDP – Purchasing Power Parity (PPP): $2.95 trillion 

France has the world’s seventh-largest economy in the world. It is also the world’s most visited country, with a flourishing tourism sector as a result. Foreign trade is also an important part of the country’s economy. [3]

Imports and exports account for 63% of the country’s GDP. Investors are enticed by strong property rights protection and a well-functioning regulatory environment. There are foreign players in a variety of industries, and 31 Fortune 500 businesses are based in France.

8. Italy 

Euro banknotes on the map of Europe, selective focus

  • GDP – Nominal: $1.88 trillion 
  • GDP Per Capita: $30,657
  • GDP – Purchasing Power Parity (PPP): $2.42 trillion 

Italy has the third-largest economy in the Eurozone and the eighth-largest GDP. It is a vital member of the Eurozone, the EU, the G7, the OECD, and the G20, in addition to having a large economy.

The expenditure side of GDP accounts for 61% of household consumption, 19% of government spending, and 17% of gross fixed capital formation. Exports of services and goods account for 30% of GDP, while imports account for 27% and contribute 3% to GDP.

9. Canada 

Canada Economy Improves and Returns to Normal After Crisis

  • GDP – Nominal: $1.64 trillion 
  • GDP Per Capita: $42,080 
  • GDP – Purchasing Power Parity (PPP): $1.81 trillion 

Canada’s economy is mainly service-based. The threshold is CAD 5 million for direct investments, and the threshold is CAD 50 million for indirect investments. Since 1995, the country has been a core member of the World Trade Organization (WTO).

Due to bilateral and regional Free Trade Agreements, it enjoys extensive commercial links with several countries (FTAs). Canada is a desirable investment destination because of its well-educated workforce, multicultural/multilingual coexistence, booming economy, and government support for starting a business.

10. South Korea 

South Korea economy and financial market growth concept, 3D rendering

  • GDP – Nominal: $1.63 trillion 
  • GDP Per Capita: $30,644
  • GDP – Purchasing Power Parity (PPP): $2.29 trillion 

South Korea’s economy experienced a period of fast growth due to far-reaching economic reforms (about an annual 10 percent growth for over 30 years). South Korea’s GDP is currently above $2 trillion, making it one of the world’s most developed and industrialized nations.

South Korea places a high value on education, innovation, and research & development spending. The country’s workforce is highly skilled, with a high median household income of 24,390 USD (2020). Services account for 59 percent of the country’s GDP, followed by industry at 38 percent and agriculture at 2%. [4]

Conclusion

The positions of the countries with the largest economies have been changing since the beginning of time. However, what has remained constant is that economies are always fluctuating in size and value. As with most things, economics is relative to the people and societies participating in it. However, none of these nations can be compared to the economic power of the European Union, which has a combined GDP of $15.292 trillion (as of 2020), representing around 1/6 of the global economy. [6]

References

  1. https://www.usnews.com/news/best-countries/rankings/entrepreneurship 
  2. https://power.lowyinstitute.org/data/future-resources/economic-size-2030/gdp-2030/ 
  3. https://worldpopulationreview.com/country-rankings/most-visited-countries
  4. https://www.statista.com/statistics/1112986/south-korea-median-household-income
  5. https://www.britannica.com/place/United-Kingdom/Economy
  6. https://data.worldbank.org/indicator/NY.GDP.MKTP.CD?locations=EU 

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