Nominal GDP is a measure of economic size. OECD countries compile their data according to the System of National Accounts (SNA) of 2008. According to this measure, China is the largest economy by nominal GDP and the United States is the second-largest. But the ranking is inaccurate because Vietnam and Pakistan were not included in the visualization. These countries were incorrectly left out of the visualization because IMF data is not yet available for 2021.
China is second in manufacturing
In the past, China has been viewed as a low-cost manufacturing center, providing a low-cost service for global brands. That image has slowly disappeared as manufacturing costs in China have risen steadily. The country is still competitive, however, and many global companies are tapping into its manufacturing power as a growth engine.
China’s economy is currently the second-largest in the world, behind the US. Although it has been in a fast-growing phase in recent years, it has now entered a slowing phase as it transitions from a developing economy to a mature developed economy. In the 1980s and 1990s, China’s annual GDP growth rates were over 10 percent, but now they are less than half that.
According to the latest research by McKinsey & Co., China’s manufacturing industry is maturing, with supply chains maturing and innovation capabilities strengthening. Despite the impact of COVID (19), this trend is expected to continue. China’s population is now nearly 3.5 times larger than the U.S., but American consumers are still significantly wealthier.
Although China’s economy is growing at an incredible pace, it has been plagued by several economic problems. Its middle class has become increasingly dissatisfied with the economy, while its productivity and innovation have fallen behind those of the United States. However, in the second decade of Xi Jinping’s rule, China has begun to take on its share of the world’s largest economy, and it is on track to unseat the United States in several areas.
United States is third
The United States is one of the most dynamic economies in the world. Entrepreneurs are encouraged to thrive in this environment, and the country is home to many advanced research universities. The country is also home to decentralized government and a favorable regulatory environment. These factors are responsible for the nation’s continued success.
GDP, or gross domestic product, is the measure of economic strength. It measures total income produced by a country and is measured in nominal or purchasing power parity (PPP) dollars. The US currently has the third largest economy in the world, and China is catching up.
FocusEconomics panelists project that the U.S. will remain the world’s third largest economy by 2021, with a nominal GDP of USD 25 trillion. Strong private consumption and favorable demographics will drive this growth, but soaring public debt and potential resurgence of inflation will threaten growth. The United States will lose its economic clout relative to other developed countries, with the BRIC economies accounting for over 10% of the global economy by 2024.
Germany is the fourth largest economy in the world. Its GDP (PPP) is $3.86 trillion, making it the largest economy in Europe. The country is the largest exporter of vehicles, machinery, chemicals, and more, and its workforce is highly skilled. The United Kingdom is the fifth largest economy in the world. The country’s economy grew by 2.83 trillion dollars in 2019. However, it is not as strong as its U.S. counterpart.
California is poised to overtake Germany as the world’s fourth largest economy in 2021
California has surpassed Germany’s GDP growth rate by more than a half a percentage point in the last three years, according to Bloomberg. That boost has led to California’s market cap and corporate revenues increasing by over one hundred and seventy per cent. While Germany holds a slight edge over California in GDP, Bloomberg predicts that it will lose that advantage by the middle of the next decade.
Although the two states share a common currency, the USD is worth about 20% more than EUR. The difference is reflected in how the two states’ GDP will grow in the next few years. If the trend continues, California could move up a spot to the fourth spot. However, it is important to note that the US will still be the world’s leading economy in 2021, so it’s crucial to watch the exchange rate trend.
If California’s economic growth continues at a three-to-one pace, it could surpass Germany as the world’s fourth largest economy by 2021. The top ten companies in California have grown by 8% over the past three years, outpacing Germany’s top 10 firms by nearly three-to-one. In fact, California’s top companies are on track to turn $100 of sales into $49 in profits, while the German top ten companies will see their GDP drop by 2% over the next few years. In contrast, Germany’s largest firms will grow by 4%, and generate profits per $100 of sales of $43 in 2023. But Germany has suffered from the war in Ukraine, which has significantly impacted its GDP.
While Japan will remain the third largest economy, the United States will lose ground to emerging and developed countries. The aging of its population and the slowdown of the economy will result in anemic growth. Germany is expected to remain the fourth largest economy, despite its recent economic crisis. A robust manufacturing sector will offset its shrinking population.