Since there are different phases to an economic cycle, these phases move the economies around the world. However, the top economies do not drop their positions too easily.
According to the IMF’s World Economic Outlook Database as of October 2019, the following are the world’s top economies according to nominal gross domestic product and GDP based on purchasing power parity (PPP).
The United States
Since 1871, the US has retained its ranking as the world’s biggest economy. The size of the US economy was at $20.58 trillion in 2018 in nominal terms. In 2020, it is expected to reach $22.32 trillion.
The US is usually described as an economic superpower because the economy constitutes almost a quarter of the global economy. It is supported by advanced infrastructure, technology, and natural resources.
However, when basing on purchasing power parity, the US loses the top spot to China, its close competitor. In 2019, the US was at $21.44 trillion in terms of GDP PPP. The Chinese economy was at $27.31 trillion.
China has benefitted from tremendous growth over the past few decades. It broker barriers of a centrally planned closed economy to transform into a manufacturing and exporting hub of the world.
This Asian country is often referred to as the “world’s factory” because of its huge manufacturing and export base.
On the other hand, the role of services has slowly increased and manufacturing declined over the years. In 1980, China was ranked as the seventh biggest economy.
But since it started market reforms in 1978, Beijing has experienced an economic growth averaging 10% annually.
Japan ranks as the fourth largest economy in the world, recording a GDP crossing the $5 trillion dollar mark in 2019.
The 2008 financial crisis shook the Japanese economy. Since then, it has been a challenging time for the economy.
The global crisis kicked off a recession, and then it was followed by weak domestic demand and huge public debt.
About the time the economy was starting to recover, the country suffered a massive earthquake that damage the country socially and economically.
Although the economy has broken the deflationary trend, significant economic growth remains elusive.
Germany is Europe’s biggest economy. Apart from that, it’s also the strongest.
On the global scale, it ranks the fourth largest economy in terms of nominal GDP. The country has been reliant on capital good exports, which has suffered after the 2008 financial crisis.
In 2016 and 2017, the economy grew 2.2% and 2.5% respectively. But the IMF says that this declined to 1.5% and 0.5% in 2018 and 2019, respectively.
To boost the manufacturing sector in the prevailing global situation, the country launched Industrie 4.0, which is its strategic initiative to establish the country as a lead market and provider of advanced manufacturing solutions.
India is considered the fastest growing trillion-dollar economy in the world and the fifth largest overall. Its nominal GDP is $2.94 trillion.
It has become the fifth-biggest economy in 2019, overtaking the United Kingdom and France. The country is third when it comes to GDP PPP at $11.33 trillion.
The Indian economy’s post-independence journey started out as an agrarian one. But over the years, the manufacturing and services sector has emerged strongly.
Today, the service sector is the fastest-growing sector in the world, contributing to more than 60% of its economy.