A country’s Gross Domestic Product (GDP) is the first and foremost aspect that determines its economic standing in the world. Over the years, there have been a few changes in the list indicating the world’s largest economies in the terms of GDP. The key players have not budged from their positions and have maintained the status of a rich country. To compare the GDPs of the various countries, their currencies are converted to maintain consistency. There are two kinds of currency conversion systems; PPP and Nominal.
Given below is a list of the world’s top 5 economies based on the nominal GDP as per the IMF’s World Economic Outlook Database, April 2019.
1. The United States
Since 1871, the U.S. has maintained itself on the position of the world’s largest economy. In 2018, the nominal GDP of the country was $20.49 trillion and in 2019, it is expected to reach $21.35 trillion. The U.S. is referred to as an economic superpower mostly because a quarter of the world’s economy is contributed by the country, with the help of its advanced infrastructure, an abundance of natural resources and technology. The country’s service industry makes up almost 80% of its GDP while the manufacturing sector contributes only around 15% to it. When compared on the basis of the PPP GDP, the U.S. is dragged down to the second spot while China takes the first. In 2018, the country’s PPP GDP was $20.49 trillion, while China’s was $25.27 trillion. By 2023, the U.S. economy and the Chinese economy are expected to grow to $24.81 trillion and $19.71 trillion in nominal terms respectively.
2. China
Over the past few decades, China has witnessed rapid growth and has evolved into an exporting and manufacturing hub. For this reason, it is also known as the “world’s factory”. With the nominal GDP of $305.35 billion, China was the world’s seventh-largest economy in 1980 while the GDP of the U.S. was $2.86 trillion. Ever since China implemented market reforms in 1978, it has witnessed a staggering annual economic growth averaging 10%. In 2018, its nominal GDP was $13.41 trillion, $7.08 trillion less than the GDP of the U.S. The gap between the GDPs of the two economies is expected to shrink to $7.13 trillion. In terms of PPP GDP, China is the world’s largest economy.
3. Japan
The world’s third-largest economy, Japan had a nominal GDP of $4.97 trillion in 2018. In 2019, its economy may reach the $5 trillion mark. Japan is dragged down to the fourth position in terms of PPP GDP. In 2018, the country’s PPP GDP was $5.60 billion while its GDP per capita was $39,305.78.
4. Germany
Germany is Europe’s largest and strongest economy. With the nominal GDP of $4 trillion GDP, the country is on the fourth spot globally. In 1980, it was on the third position with a GDP of $850.47 billion. The country depends on capital good exports and suffered a setback due to the post-2008 financial crisis. Its PPP GDP is $4.36 trillion while its GDP per capita is $48,264.01.
5. The United Kingdom
The nominal GDP of the UK is $2.83 trillion which makes it the world’s fifth-largest economy. When its PPP GDP is taken into account, the U.K. drops down to the ninth position with a PPP GDP of $3.04 trillion. It has a GDP per capita of $42,558. Its nominal GDP is expected to remain constant during 2019. However, it may slide down to the seventh position by 2023 with a nominal GDP of $3.27 trillion. The country’s service sector is the major contributor to its GDP followed by the manufacturing sector.
Being the world’s largest economies, these five countries along with the other five countries listed among the world’s top ten economies account for 66% of the world’s economy. Also, the top 20 economies contribute about 79%. Leaving the remaining 173 countries to contribute to less than a quarter of the world’s economy.