When it comes to the top 10 national economies around the globe, the order may shift a bit, but the key players usually remain the same, and so does the name at the head of the list. The United States has been the world’s biggest economy since 1871. But that top ranking is now under threat from China.
The Top 10 Economies in the World
Note: This list is based on estimates for 2017 by IMF’s World Economic Outlook Database, April 2017. Select data is from the CIA World Factbook . (Nominal GDP = gross domestic product, current prices, U.S. dollars, GDP per capita (PPP) = gross domestic product based on purchasing-power-parity (PPP) per capita, current international dollar, and GDP based on PPP = gross domestic product based on purchasing-power-parity (PPP) valuation of country GDP, current international dollar)
United States
The U.S. economy remains the largest in the world in terms of nominal GDP. The $19.42 trillion U.S. economy is 25% of the gross world product. The United States is an economic superpower that is highly advanced in terms of technology and infrastructure and has abundant natural resources. However, the U.S. economy loses its spot as the number one economy to China when measured in terms of GDP based on PPP. In these terms, China’s GDP is $23.19 trillion exceeds the U.S. GDP of $19.42 trillion. However, the U.S. is way ahead of China in terms of GDP per capita in nominal terms as well as PPP; GDP per capita (PPP) for the U.S. economy is approximately $59,609 versus $16,676 in China. In nominal terms, China’s GDP per capita further falls to $8,480.
China
China has transformed itself from a centrally-planned closed economy in the 1970s to a manufacturing and exporting hub over the years. Since it initiated market reforms in 1978, the Asian giant has achieved economic growth averaging 10% annually (though it’s slowed recently) and, in the process, lifted almost half of its 1.3 billion population out of poverty and become the undisputed second-largest economy on Earth. The Chinese economy has already overtaken the U.S. economy in terms of GDP, based on another measure known as purchasing power parity (PPP) , and is estimated to pull ahead of the U.S. steadily in the following years. However, the difference between the economies in terms of nominal GDP remains large with China's $11.8 trillion economy. The Chinese economy has long been known for its strong growth, a growth of over 7% even in recent years. However, the country saw its total GDP growth go down to 6.7% in 2016 and is projected to slow to 6.6% in 2017, and further decline to 5.7% by 2022. The country's economy is propelled by an equal contribution from manufacturing and services (45% each, approximately) with a 10% contribution by the agricultural sector.
The nominal GDP for the U.S. and China for the year 2022 is estimated at $23.76 trillion and $17.71 trillion respectively, while the GDP in terms of PPP is projected at $23.76 trillion for the U.S. and $34.31 trillion for China.
Japan
Japan’s economy currently ranks third in terms of nominal GDP, while it slips to fourth spot when comparing the GDP by purchasing power parity. The economy has been facing hard times since 2008, when it first showed recessionary symptoms. Unconventional stimulus packages combined with subzero bond yields and weak currency have further strained the economy (for related reading, see: Japan's Economy Continues to Challenge Abenomics ). Economic growth is once again positive, to about 1% in 2016 and further to around 1.2% in 2017; however, it is forecasted to stay below 1% during the next five years. The nominal GDP of Japan is $4.84 trillion, its GDP (PPP) is $5.42 trillion, and its GDP (PPP) per capita is $42,860.
Germany
Germany is Europe’s largest and strongest economy. On the world scale, it now ranks as the fourth largest economy in terms of nominal GDP. Germany’s economy is known for its exports of machinery, vehicles, household equipment, and chemicals. Germany has a skilled labor force, but the economy is facing countless of challenges in the coming years ranging from Brexit to the refugee crisis (for related reading, see: 3 Economical Challenges Germany Faces in 2016). The size of its nominal GDP is $3.42 trillion, while its GDP in terms of purchasing power parity is $4.13 trillion. Germany’s GDP (PPP) per capita is $49,814, and the economy has moved at a moderate pace of 1-2% in recent years and is forecasted to stay that way.
United Kingdom
The United Kingdom, with a $2.5 trillion GDP, is currently the world’s fifth largest. Its GDP in terms of PPP is slightly higher at $2.91 trillion while its GDP (PPP) per capita is $44,001. The economy of the UK is primarily driven by services, as the sector contributes more than 75% of the GDP. With agriculture contributing a minimal 1%, manufacturing is the second most important contributor to GDP. Although agriculture is not a major contributor to GDP, 60% of the U.K.’s food needs is produced domestically, even though less than 2% of its labor force is employed in the sector.
After the referendum in June 2016 when voters decided to leave the European Union, economic prospects for the UK are highly uncertain, and the UK and France may swap places. The country will operate under EU regulations and trade agreements for two years after the formal announcement of an exit to the European Council, in which time officials will work on a new trade agreement. Economists have estimated that Brexit could result in a loss of anywhere from 2.2-9.5% of GDP long term, depending on the trade agreements replacing the current single market structure. The IMF, however, projects growth to stay between 1.5-1.9% in the next five years.
