World’s largest economies and currencies

The different phases of economic cycles affect economies around the world. However, it is interesting to see that these top economies rarely lose the positions they hold. Compared to the world’s largest economies in 1980, 17 are still on the list, meaning that only three new players have emerged. In addition to the fact that the key players remain almost the same, this analysis shows that these economies are the engine of growth and represent a majority of global wealth. The nominal GDP of the top 10 economies represents around 66% of the world economy, while the top 20 economies contribute almost 79%.1 The remaining 173 countries together represent less than a quarter of the world economy. Note, however, that there is a big difference in GDP per capita, that is, income per person, between these countries. This list is based on the IMF’s World Economic Outlook Database, October 2019. IMF’s World Economic Outlook Database, October 2019 Nominal GDP = gross domestic product, current prices, US dollars GDP based on PPP = gross domestic product, current prices, purchasing power parity, international dollars Gross domestic product per capita, current prices, US dollars Gross domestic product based on purchasing power parity (PPP) share of world total, percent

1. THE USA

US nominal GDP: $21.44 billion – US GDP (PPP): $21.44 billion. The United States has maintained its position as the world’s largest economy since 1871. The size of the US economy was $20.58 trillion in 2018 in nominal terms and is expected to reach $22.32 billion by 2020. The United States is often referred to as an economic superpower and this is because its economy makes up almost a quarter of the global economy, supported by advanced infrastructure, technology and an abundance of natural resources. When economies are assessed in terms of purchasing power parity, the US loses its top spot to its close competitor China. In 2019, the US economy, in terms of GDP, amounted to $21.44 trillion, while the Chinese economy was measured at $27.31 billion. The gap between the size of the two economies in terms of nominal GDP is expected to narrow by 2023; the US economy is projected to grow to $24.88 billion by 2023, followed by China at close to $19.41 trillion.

2. China

China’s nominal GDP: USD 14.14 trillion – GDP in China (PPP): USD 27.31 billion. China has experienced exponential growth in recent decades, breaking the barriers of a centrally-planned closed economy to develop into a manufacturing and export hub of the world. China is often referred to as the ‘factory of the world’ given its huge manufacturing and export base. But over the years, the role of services has gradually increased and the role of manufacturing as a contributor to GDP has relatively decreased. Back in 1980, China was the seventh largest economy with a GDP of $305.35 billion, while the size of the US then was $2.86 trillion. Since it embarked on market reforms in 1978, the Asian giant has seen economic growth average 10% annually. In recent years, the growth rate has slowed, although it remains high compared to its peer countries. The IMF projects a growth rate of 5.8% in 2020, which would drop down to around 5.6% by 2023. Over the years, the difference in size of the Chinese and US economies has been shrinking rapidly. In 2018, Chinese GDP in nominal terms amounted to $13.37 billion, lower than the US at $7.21 trillion. By 2020, the gap is expected to narrow to $7.05 billion and by 2023 the difference would be $5.47 billion. In terms of GDP in PPP, China is the largest economy with a GDP (PPP) of $25.27 billion. In 2023, China’s GDP (PPP) would be $36.99 trillion. China’s huge population lowers its GDP per capita to $ 10,100 (seventeenth position).

3. Japan

Japan’s nominal GDP: USD 5.15 trillion – Japan’s GDP (PPP): USD 5.75 trillion. Japan is the third largest economy in the world, with its GDP exceeding $5 trillion in 2019. The 2008 financial crisis shook the Japanese economy and it has been a challenging time for its economy ever since. The global crisis triggered a recession, followed by weak domestic demand and huge public debt. As the economy began to recover, it was hit by a massive earthquake that hit the country socially and economically. While the economy has broken the deflationary spiral, economic growth remains subdued. Its economy will receive little stimulus with the 2020 Olympics keeping investment flows strong, supported by a lax monetary policy by the Bank of Japan. Japan slips to the fourth place when GDP is measured in terms of PPP. GDP (PPP) is $5.75 trillion in 2019, while GDP per capita is $40,850 (24th place).

4. Germany

Germany Nominal GDP: USD 3.86 trillion – Germany GDP (PPP): USD 4.44 billion. Germany is not only Europe’s largest economy, but also the strongest. At the global level, it is the fourth largest economy in terms of nominal GDP, with a GDP of $4 trillion. The size of its GDP in terms of purchasing power parity is $ 4.44 billion, while its GDP per capita is $ 46,560 (18th place). Germany was the third largest economy in nominal terms in 1980 with a GDP of $ 850.47 billion. The nation has been reliant on capital good exports, which suffered a setback after the post-2008 financial crisis. The economy grew by 2.2% and 2.5% in 2016 and 2017 respectively. However, the IMF says this dropped to 1.5% and 0.5% in 2018 and 2019 respectively. To strengthen its manufacturing strength in the current global scenario, Germany has launched Industrie 4.0 – its strategic initiative to establish the country as a leading market and provider of advanced manufacturing solutions.

5. India

India’s Nominal GDP: $2.94 trillion – India GDP (PPP): $10.51 trillion. India is the fastest growing trillion-dollar economy in the world and the fifth largest overall, with a nominal GDP of $2.94 trillion. India has become the fifth largest economy in 2019, overtaking the UK and France. The country ranks third when GDP is compared in terms of purchasing power parity at $ 11.33 billion. When it comes to calculating GDP per capita, India’s high population drags its nominal GDP per capita down to $2170. The Indian economy was only $189,438 billion in 1980, ranking 13th on the list globally. India’s growth rate is expected to rise from 7.3% in 2018 to 7.5% in 2019 as the drag from the currency exchange initiative and the introduction of the Goods and Services Tax fades according to the IMF. India’s post-independence journey began as an agricultural nation; however, over the years, the manufacturing and services sectors have developed strongly. Today, its services sector is the fastest growing sector in the world, contributing more than 60% to its economy and accounting for 28% of employment. Manufacturing remains one of the most important sectors and is receiving due push via government initiatives, such as ‘Make in India’. Although the contribution of the agricultural sector has declined to around 17%, it is still much higher compared to the Western countries. The strength of the economy lies in a limited dependence on exports, high savings, favorable demographics and a rising middle class.

6. United Kingdom

U.K. nominal GDP: 2.83 trillion USD – U.K. GDP (PPP): 3.04 trillion USD. The United Kingdom, with a GDP of USD 2.83 trillion, is the sixth largest economy in the world. Compared in terms of GDP purchasing power parity, the UK slips to the ninth spot with a GDP PPP of $3.04 trillion. It ranks 23rd in terms of GDP per capita, which is $42558. Its nominal GDP is projected to remain at $2.83 trillion in 2019, but the ranking is expected to slip to the seventh spot in 2023 with its GDP of $3.27 trillion. From 1992 to 2008, the UK economy witnessed a trend in every quarter. However, it saw a decline in its output for five consecutive quarters starting in April 2008. The economy shrank by 6% during this time (between the first quarter of 2008 and the second quarter of 2009) and eventually took five years to grow back to pre-recession levels, according to data from the Office of National Statistics. The UK economy is mainly driven by the services sector, which contributes more than 75% of GDP, with manufacturing the other prominent segment, followed by agriculture. Although agriculture is not a major contributor to its GDP, 60% of the UK’s food needs are produced domestically, although less than 2% of the labor force is employed in the sector.

7. France

France’s Nominal GDP: $2.71 trillion – France’s GDP (PPP): $2.96 trillion. France, the most visited country in the world, is Europe’s third largest economy and the sixth largest in the world, with a nominal GDP of $2.78 trillion. Its GDP in terms of purchasing power parity is around $2.96 trillion. The country offers a high standard of living for its people, as reflected in its GDP per capita of $42,877.56. In recent years, economic growth has slowed down, resulting in unemployment which has put immense pressure on the government to restart the economy. The World Bank has recorded an unemployment rate of 10% in 2014, 2015 and 2016. In 2017, it fell to 9,681%. In addition to tourism, which remains very important to its economy, France is a leading agricultural producer, accounting for about a third of all agricultural land within the European Union. France is the world’s sixth largest agricultural producer and the second largest agricultural exporter, after the United States. The manufacturing sector is mainly dominated by the chemical, automotive and armaments industries. The economy has grown by 2.3% in 2017 and is expected to grow 1.8% and 1.7% in 2018 and 2019 according to the IMF.

8. Italy

Italy’s Nominal GDP: USD 1.99 trillion – GDP in Italy (PPP): USD 2.40 trillion. With a nominal GDP of $2.07 trillion, Italy is the world’s eighth largest economy. Its economy is expected to expand to $2.26 trillion by 2023. In terms of GDP (PPP), its economy is worth $2.40 trillion and it has a GDP per capita of $34,260.34. Italy – a prominent member of the eurozone – has been in deep political and economic chaos. Unemployment continues to be in double digits, while public debt remains at around 132% of GDP. On the positive side, exports and business investment are driving the economic recovery. The economy clocked 0.9% and 1.5% in 2016 and 2017 respectively. It is projected to go down to 1.2% in 2018 and 1.0% in 2019.

9. Brazil

Brazil’s nominal GDP: USD 1.85 trillion – Brazil’s GDP (PPP): USD 3.37 billion. Brazil is the largest and most populous nation in Latin America. With a nominal GDP of $1.87 trillion, Brazil is the ninth largest economy in the world. The nation that had been riding the commodity wave suffered several setbacks at the end of the commodity supercycle, in addition to internal problems of corruption and political uncertainty, which dampened the investment and business environment. Over the period 2006-2010, the nation grew by an average of 4.5%, slowing to around 2.8% in 2011-2013. In 2014, it barely grew by 0.1%. In 2016, Brazil contracted by 3.5% before recovering by 1% in 2017. The IMF projects economic growth to revive to 2.5% by 2019. Brazil is part of the BRICS, along with Russia, India, China and South Africa. The country has a GDP (PPP) of $ 3.37 trillion and a GDP per capita of $ 8 967.66.

10. Canada

Canada’s nominal GDP: 1.73 trillion USD – GDP in Canada (PPP): 1.84 trillion USD. Canada displaced Russia to occupy the 10th place in 2015 and has maintained its position since then. Canada’s nominal GDP is currently USD 1.71 trillion and is expected to touch USD 1.74 trillion in 2019 and USD 2.13 trillion in 2023. GDP per capita of USD 46,260.71 ranks 20th globally, while GDP of USD 1.84 trillion in terms of PPP pulls down to 17th spot. The country has curbed its unemployment rate and is likely to shrink further. While services are the largest sector, manufacturing is the cornerstone of the economy, with 68% of its exports constituting exports of goods. Canada places great emphasis on manufacturing, which is crucial for its future economic growth. Canada grew by 3% in 2017 compared to 1.4% in 2016 and is expected to grow 2% in 2018 and 2019.

11. Russia

Russia’s nominal GDP: USD 1.64 trillion – Russia’s GDP (PPP): USD 4.21 trillion. Russia, the largest country on earth in terms of land mass, is the 11th largest economy in the world, with a nominal GDP of $1.63 trillion. Russia is moving up the ladder to the sixth spot of the ranking, with a GDP of $4.21 trillion based on PPP. The 1990s were a tough period for its economy, as it inherited a devastated industrial and agricultural sector along with the basics of a centrally planned economy. In the next decade, Russia witnessed growth at a healthy rate of 7%. However, this growth was led by the commodities boom. The Russian economy’s dependence on oil was exposed during the global financial crisis of 2008-2009 and eventually again in 2014. The situation worsened with the imposition of sanctions by the West. The economy contracted by 0.2% in 2016, but recovered with a growth of 1.5% in 2017. The IMF forecasts growth of 1.7% and 1.5% in 2018 and 2019 respectively.

12. South Korea

South Korea’s nominal GDP: 1.63 trillion USD – South Korea’s GDP (PPP): 2.14 trillion USD. The South Korean economy, known for conglomerates such as Samsung and Hyundai, is the 12th largest economy in the world, with a nominal GDP of $1.62 trillion. The country has made incredible strides in recent decades to establish itself as a high-tech, industrialized nation. South Korea has shown incredible economic growth and global integration over the past four decades to become an industrialized economy. In the 1960s, its GDP per capita was among the poorer countries in the world, which now ranks 29th with $31,345.62. Its GDP (PPP) is 2.14 trillion dollars. South Korea entered the billion dollar club in 2004, driven by international trade and industrialization. It is among the top exporters in the world and offers great investment opportunities, which is reflected in its ease of doing business ranking.

13. Spain

Spain Nominal GDP: 1.4 trillion USD – Spain GDP (PPP): 1.86 trillion dollars. The $1.4 trillion Spanish economy is the 13th largest in the world. After Brexit, Spain is the fourth largest economy in the euro area. The country, with a population of 46.6 million, has witnessed a long recession (second quarter of 2008 until the third quarter of 2013) and is slowing back to health due to record tourism and exports, along with a revival of domestic consumption. Spain replaced the UK to become the second most visited country in the world, with a huge influx of incoming tourists. In terms of sectors, agriculture has traditionally played a crucial role, but over time the contribution of this sector has fallen to around 3%. The country is still a major exporter of olive oil, pork and wine. Some of the prominent industrial sectors are automobiles, chemicals, pharmaceuticals and industrial machinery. The economy grew by 3.1% in 2017 and is expected to decline to 2.8% and 2.2% in 2018 and 2019 respectively.

14. Australia

Australia’s nominal GDP: USD 1.38 trillion – Australia’s GDP (PPP): USD 1.32 trillion. Australia is the 14th largest economy, with a nominal GDP of $1.42 trillion. The economy has grown at a good pace over the past two decades due to low unemployment, low public debt and inflation, robust exports, a strong services sector and a stable financial system. Australia is also a country rich in natural resources, as well as a major exporter of energy and food. In terms of different sectors of its economy, agriculture and industry contribute around 4% and 26% respectively, while its services sector, which employs 75% of its employed population, contributes 70% to GDP. It is estimated that Australia’s economy will be close to $1.7 trillion by 2023 and its GDP based on PPP, which currently stands at $1.32 trillion, will approach $1.65 trillion over the same time period. Australia ranks 11th on the measure in terms of GDP per capita, with $56,351.58 in 2018.

15. Mexico

Mexico’s nominal GDP: $1.22 trillion – Mexico’s GDP (PPP): $2.57 trillion. Mexico, the second largest economy in Latin America, is the 15th largest economy in the world, with a nominal GDP of $ 1,22 trillion, while the GDP in terms of PPP is $ 2,57 trillion. The same is expected to touch $1,50 trillion and $3,18 billion respectively by 2023. Back in 1980, Mexico was the 10th largest economy with a nominal GDP of $228,6 billion. The economy expanded by 2.9% and 2% in 2016 and 2017. In the next two years, the IMF projects growth of 2.3% and 2.7% respectively. The share of agriculture in the Mexican economy has remained below 4% over the past two decades, while its industry and services contribute about 33% and 63% to its output. Automotive, oil and electronics are among the developed industries, while financial services and tourism are prominent contributors in services.

16. Indonesia

Indonesia’s nominal GDP: USD 1.11 trillion – Indonesia’s GDP (PPP): USD 3.50 trillion. Indonesia is the largest economy in Southeast Asia and the 16th largest on the global map. The Indonesian economy has shown tremendous progress over the past two decades. It was a victim of the 1997 Asian financial crisis. However, it has charted impressive growth since then. The economy is now part of the trillion-dollar club, with a nominal GDP of $1.02 trillion. The World Bank cites its tremendous progress in reducing poverty – “cutting the poverty rate to more than half since 1999 to 10.9% in 2016.” Its GDP per capita at $3 871 is much higher than it was in 2000 at $857. Indonesia, the fourth most populous nation, is the seventh largest economy, with a GDP of $3.50 billion in terms of purchasing power parity. Among the sectors, agriculture contributes about 14% to its GDP, while industry and services each add about 43% to its output.

17. The Netherlands

Dutch nominal GDP: 902.36 billion dollars – Dutch GDP (PPP): 969.23 billion dollars. The Netherlands, the sixth largest economy in the European Union, is the 17th largest economy in the world. Back in 1980, the Netherlands was the 12th largest economy globally with a GDP of $189.49 billion. Today, the country has a nominal GDP of $912.90 billion and a GDP PPP of $969.23 billion. It ranks 13th based on per capita income, with a GDP per capita of $53,106.38. The economy is supported by abundant natural resources, booming tourism, and healthy industries such as food processing, chemicals, electrical machinery, and oil refining. The Netherlands boasts of its highly mechanized, highly productive agricultural sector, making it among the top agricultural exporters globally. Despite its small land mass, the Netherlands is a major player in world trade.

18. Saudi Arabia

Saudi Arabia Nominal GDP: $779.29 billion – Saudi Arabia GDP (PPP): $1.86 trillion. Saudi Arabia is predominantly an oil-based economy. The country owns about 18% of the world’s proven petroleum reserves. It ranks as the largest exporter of petroleum, with the oil and gas sectors accounting for about 50% of GDP and 70% of its export earnings. Saudi Arabia is rich in other natural resources such as natural gas, iron ore, gold and copper. The economy recovered from the 2016 oil shock with growth of 1.7%. In 2017, it ran a huge budget deficit, financed by foreign exchange reserves and bond sales. The country wants to strengthen its non-oil economy to diversify its economy and tackle the problem of unemployment. In 2018, its nominal GDP was $782.48 billion, while GDP based on PPP was $1.86 trillion. The economy, which contracted by 0.9% in 2017, is expected to grow by 1.9% in 2018 and 2019.

19. Turkey

Turkey’s nominal GDP: $ 743.71 billion – Turkey’s GDP (PPP): $ 2.29 trillion. Turkey, with its economy of $ 766.43 billion, is the 19th largest economy in the world. The share of Turkey’s middle class increased from 18% to 41% of the population between 1993 and 2010, according to the World Bank, and the country joined the upper middle-income group in the late 2000s. The economy is expected to join the trillion-dollar club by 2023, while its GDP-PPP will reach $2.78 trillion in the same year. Between 1960 and 2012, Turkey’s average annual GDP growth was 4.5%. The economy has grown at an impressive rate since the 2000s, driven by both industry and services. Its economy witnessed macroeconomic and financial stability, while its employment and income levels experienced an increase. The economy recorded growth of 7.4% in 2017. However, it is projected to soften to 4.2% in 2018 amid rising external debt, depreciating currency, rising inflation and unemployment.

20. Switzerland

Switzerland’s nominal GDP: $715.36 billion – Switzerland’s GDP (PPP): $548.48 billion. Switzerland is one of the most stable market economies in the world. It is the 20th largest economy in the world, with a nominal GDP of $703.75 billion. The country offers a very high standard of living for its people, represented by GDP per capita of $ 82 950,28, which is only behind Luxembourg. Switzerland has a thriving tourism industry and a strong financial sector. Switzerland also has a long tradition of industry, especially the watch and clock industry and pharmaceuticals. Agriculture contributes only about 1% to its GDP. The country has a highly educated workforce and low unemployment (3%). The country’s economy benefits from its stable political system, sound infrastructure and favorable tax rates. In recent years, its growth rate has fluctuated between 1-1.5%. China has the largest foreign exchange reserves China has the largest foreign exchange reserves in the world – this is how other countries measure up to China. Foreign exchange reserves can help a country buoy local currency or even provide insurance in the event of a national economic emergency. China tops other countries in foreign exchange reserves with $3.2 trillion. The dollar and the euro are the most common reserve currencies used in international transactions, so the US and the EU do not need to hold much reserves.

In the high-stakes game of international trade, holding a stock of foreign cash provides you with opportunities. Foreign exchange reserves can help fuel the local currency or even provide much-needed insurance in the event of a national economic emergency. And when reserves are plentiful, a country can even use them to exert influence over international affairs – after all, most financial assets are simultaneously someone else’s responsibility. Foreign exchange reserves by country Here’s a list of the top 10 countries – China tops the list with a solid $3.2 trillion in reserves:

The first thing you might notice on this list is that major economies like the United States and Europe are noticeably absent, but that’s because the US dollar and the euro are the most common reserve currencies used in international transactions. As a result, countries like the US do not need to hold such large reserves. To put it all in context, here’s what central banks reported in Q3 2017 for their foreign currency holdings:

Interestingly, the Japanese yen has a decent acceptance as a reserve currency, yet the country has the second highest amount of foreign exchange reserves ($1.2 trillion). This is partly because Japan is an export powerhouse, sending $605 billion worth of exports abroad every year. Why do countries have foreign exchange reserves? And now, a practical question: why do these countries have foreign exchange reserves in the first place? Here are seven reasons, as originally noted by The Balance: 1. Forex reserves allow a country to maintain the value of its domestic currency at a fixed rate 2. Countries with floating exchange rates can buy up foreign currencies or financial instruments to reduce the value of their domestic currency 3. Foreign exchange reserves can help maintain liquidity during an economic crisis 4. Reserves can give foreign investors confidence, demonstrating that the central bank has the ability to take action to protect their investments 5. Foreign exchange reserves provide a country with extra insurance to meet external payment obligations 6. Forex reserves can be used to finance certain sectors, like building infrastructure 7. They also provide a means of diversification, allowing central banks to reduce the risk of their overall portfolios.

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