World's Biggest Economies Ranked
Updated: May 5
Since the end of the Cold War, the world has witnessed rapid advancements in every sector. It led to a free and open market system that allowed international trading, with every country's economy fighting to stay on top. Globally, trading has been a popular activity for centuries because it will enable interaction between the world's wealthiest and most powerful countries. According to the Three-Sector Model, economists have divided the economy into three sectors of activity: extraction of raw materials, manufactured goods and services, and lastly, transportation of commodities. These are all extremely diverse and provide each country with a different avenue of profit that they are best known for in the financial markets.
The top 10 economies in the world contribute to around 66% of the world's overall economy. The top 20 economies contribute to around 79%, meaning that the remaining majority of world countries only equate to around 20% of the entire global economy. This shows the immense power of the 5 richest countries listed in this article and their influence on emerging economies and global economic decisions. Read on to discover some of the world's biggest economies ranked.
These statistics come from the International Monetary Fund, updated as of October 2020. The two statistics reflect nominal GDP and GDP using PPP (purchasing power parity). The latter considers inflation rates of a country and relative costs of goods and services, rather than simple market exchange rates or economic analysis. However, the nominal GDP is more commonly used to represent the overall figure of a country's economy.
1. United States
Nominal GDP: $22.66 trillion
GDP (PPP): $22.68 trillion
The United States has held the position of the world's strongest economy since 1871, after surpassing the United Kingdom at the time. The United States dollar (USD) is one of the strongest currencies globally and the most popular currency to trade overall.
Nominal GDP: $16.64 trillion
GDP (PPP): $26.66 trillion
Although China's purchasing power parity is of a higher figure, its nominal GDP is significantly less than that of the US, leaving it second of the wealthiest countries in the world. However, many consider PPP to be a more indicative and truthful representation of the economy, as it takes into consideration price inflation. China is the world's largest manufacturing economy and exporter of goods and the largest country for international trade.
Nominal GDP: $5.38 trillion
GDP (PPP): $5.59 trillion
Japan is known for its thriving automobile industry, with notable brands such as Toyota, Honda, Nissan etc that contribute to a large proportion of the profits. Japan's technological advancements in the field of technology and natural sciences must also be noted. The GDP growth also features a number of stocks from different sectors, including technology, transportation, consumer goods and finance.
Nominal GDP: $4.32 trillion
GDP (PPP): $4.74 trillion
Germany is the leader of Europe's largest economies and relies heavily on the export of high-quality manufactured goods. Aside from a successful stock exchange, German's treasury market contributes to its role as one of the largest economies in the world.
5. United Kingdom
Nominal GDP: $3.12 trillion
GDP (PPP): $3.17 trillion
The United Kingdom has one of the world's most globalised economies and international trade plays an important role in the economy. The services sector contributes to around 80% of overall GDP, with a particular focus on banking and finance, as the UK is the world's second-largest financial centre, after New York.
Following closely behind as having some of the largest economies are India, France, Italy, Canada, South Korea, and Latin America.