Nations around the globe are stirred by the various stages of economic cycles.
It is exciting to see, yet, that these countries with the highest GDP (gross domestic product) do not move from their positions.
17 are still on the list compared to the biggest 20 markets of 1980, meaning only three newcomers and almost no change in the top 10 strongest economies by GDP.
Besides the economic superpowers in the world holding their positions, a deeper analysis shows that the countries have a significant influence on the world’s economy (world’s GDP).
Together, unfortunately, because of various factors, the bottom 173 nations make up less than a fifth of the world economy.
For you to understand, I listed them on 2 factors, Nominal GDP, and to get a deeper picture, Purchasing Power Parity.
The data is based on the World Economic Outlook IMF report and national statistics. These are the top 10 largest economies in the world:
The world’s tenth biggest economy is just ahead of Russia.
Canada reported stable financial development from 1999 to 2008, with annual GDP expanding by an average of 2.9% fold.
Because of its close financial relations with the United States, the Canadian economy quickly rebounded from the impact of the recession in 2009.
Being the second-largest economy in North America has its advantages, like a comparatively stable global sector and the resource-rich power of its resource-rich western regions.
Since 2010, on average, the economy of Canada has risen by around 1.4% per year between 2010 and 2013.
It hit the Canadian economy after the completion of the commodities supercycle, which recovered in recent years.
The nominal GDP of Canada stands at USD 1.71 trillion with an annual growth pace of 2.0% in 2019 and is anticipated to reach $2.43 trillion by 2023.
In the long run, according to our econometric models, it is an expectation that Canada’s GDP to move around USD 2 trillion in 2021.
Why does Canada have a high GDP?
1. Fourth highest in total natural resources.
2. Called as an energy superpower because it has the third biggest proven petroleum reserves.
3. Stability in Government & ranks among the least corrupt country in the world.
4. Highly globalized economy.
Brazil is Latin America’s most populated, biggest country by size as well as the biggest economy.
Brazil is currently recovering from a socialism-focused economy with a nominal GDP of $1.868 trillion in 2018.
The nation is renowned for its textile, shoe, cement, lumber, iron ore, and tin sectors.
This results in a comparatively powerful industry of agriculture, which accounts for about 6% of the total GDP.
Services (72.8%) and industrial manufacturing (21%) sectors, yet, still account for most of the country’s GDP, as in most modern industries.
Brazil continues to recover from a strong 2015 and 2016 recession.
Unfortunately, problems amplified for the country after COVID-19’s shocking impact.
To make matters worse, before the pandemic Brazil’s unemployment rates were around 11.8% (highest in the list), one can only imagine the skyrocketed unemployment situation now.
Before the crisis, it revealed financial products in the nations to be considerably greater in 2013 and 2014 at nearly USD 2.5 trillion.
The IMF (International Monetary Fund) recently decreased Brazil’s forecasts below 1% because of weakening confidence in political stability and uncertainty over exchange rates.
“The sizable downward revision for 2019 reflects downgrades to Brazil, where sentiment has weakened considerably as uncertainty persists about the approval of pension and other structural reforms,” the IMF said.
Why is brazil a rich country?
1. An enormous amount of natural resources like gold, uranium, iron, and timber.
2. The booming manufacturing industry as exports is increasing.
Italy holds the eighth position in world economy ranking.
Italy is undergoing political unrest, economic stagnation, and the absence of significant changes holding it back from other European countries.
The industry reported contractions of 2.4% and 1.8% in 2012 and 2013, but in the past few years, the economy has strengthened.
The country is trying to build-up better financial relations with its neighboring small nations like Bosnia and Herzegovina, France, and other European economies.
It remains burdened by various long-standing leadership issues, including a rigid labor market, Stagnant productivity, high tax rates,
Big, though decreasing numbers of non-performing loans in the banking sector; and high government debt.
These weaknesses limit the financial growth of the country, maintaining its viewpoint for development below that of its counterparts in Europe.
Italy’s unemployment level remains double-digit, while its government deficit stays tight at around 132% of GDP.
On the positive aspect, financial growth is driven by exports and growth in investments.
What is Italy’s economy based on?
1. It is among the eight largest exporters in the world.
2. Profitable exports include high-quality automobile, naval, industrial, various appliances, agricultural products, wine (Italy is the largest wine producer).
3. It is the third biggest luxury hub in the world & the biggest in Europe.
7. United Kingdom
The UK, with a GDP of $2.72 trillion, holds the seventh spot in GDP by country in 2019-2020. Compared to GDP by purchasing-power-parity, UK drops to the ninth spot with a $3.16 trillion.
IMF projects its nominal GDP in 2020 at $2.744 trillion, but we expect its ranking to slip to lower place by 2023 with $3.47 trillion in GDP.
The UK is powered mainly by the services sector, which adds over 75% of GDP with manufacturing, the second prominent sector followed by farming.
There is still time to complete the Brexit negotiations between the UK and the EU, which resulted in a fall in capital markets pushing FTSE 100 down from its all-time high in May 2018.
Growth is likely to slow next year as Brexit’s uncertainty, which will depress private consumption growth and fixed investment.
But, a stronger external sector and stable worldwide supply could reduce the slowdown.
By 2020, with a nominal GDP of USD 3.2 trillion, the UK will remain in the top five strongest countries by GDP.
Newly elected British prime minister, Boris Johnson is expected to settle this matter as soon as possible to reduce Brexit’s impact on global financial stability.
Why the UK is so rich?
1.Highly mechanized & efficient Agricultural sector.
2. Strong Financial & Service based sector.
France’s economy accounts for about one-fifth of the European Union’s total gross domestic product (EU GDP).
Services are the main contributor to the economy of the country, with this industry accounting for over 70 percent of GDP.
France is one of the world’s leading manufacturers in the automotive, aviation and rail industries, and cosmetics and luxury goods.
Besides, it has a highly educated workforce and the largest number of science graduates in Europe per thousand workers.
The French economy has sustained the financial crises comparatively well compared to its peers.
Partially protected by low dependence on external trade and stable levels of private consumption, France’s GDP declined only in 2009.
Recovery, yet, has been rather slow, and high unemployment levels and continues to be an increasing problem for policymakers, particularly among youth in this seventh strongest economy.
Why is France so wealthy?
1. Tourism is an important factor, as France is the most visited tourist destination in the world.
2. Sixth largest agricultural producer in the world & EU’s biggest.
3. It focuses less on the import of fossil fuels, as most of its energy requirements are self-reliant.
4. Third largest Military & Arms exporter in the world.
5. Exports include aeronautics, pharmaceutical products, metals, and beverages.
The nation lists the third position as the largest economies in the world 2020 when comparing GDP of $11.32 trillion in purchasing power parity.
The large population of India drags its nominal GDP percent down to $2,199 when it gets to calculating countries by nominal GDP per capita.
We expect India to surpass both the United Kingdom by 2020 to become the world’s fifth-biggest economy with a nominal GDP of over $2.9 trillion.
Today, its service sector is the world’s fastest-growing sector, adding to its economy by over 30 percent.
Manufacturing continues as one of its key industries (currently in slowdown) with regular encouragement through government awareness initiatives like “Make in India.”
Despite its agricultural sector’s input has decreased to about 47%, it is still much higher compared to the western countries and other emerging markets.
Because of a falling rupee, a high current account balance, and weak industry growth, India started to see a development decline in previous years.
The U.S. intensified this by choice to break quantitative easing as investors started pulling cash out of India quickly.
Recently, its financial growth has exceeded China, making India as the fastest growing economy in the world.
Why is India a developing country?
1. Energy-wise, India is the second-largest coal producer, the second-largest steel producer, and the third-largest electricity producer in the world.
2. The biggest exports include refined petroleum products, agricultural products, precious gems and jewelry, machinery, Pharma, IT services, Textile, etc.
Germany is not only the largest but also the strongest economy in Europe. On a worldwide scale, with a $3.95 trillion GDP, it is the fourth largest nominal GDP economy.
The purchasing power parity output of its GDP is $4.4 trillion, while per capita GDP is $48,264 (16th).
Germany majorly depends on exports of capital goods, automotive machinery & types of equipment.
It is one of the biggest iron, steel, coal, chemicals, machinery, automobiles, and machine tools suppliers in the world.
Germany has introduced Industrie 4.0 — its strategic plan to develop the nation as a leading market and supplier of advanced production solutions — to sustain its production power in the present worldwide situation.
Why is Germany so rich?
1. German machinery manufacturing is very high compared to its peers, for this, its exports are more valuable than other manufacturing exporters in the world (like China).
2. Low national spending & stable interest rates.
3. Good in natural resources, spend less on imports.
In terms of nominal GDP projections, the Japanese economy stands third at USD 5.14 trillion in 2020.
Before the 1990s, Japan was today’s China’s equivalent, exploding in the 1960s, 70s, and 80s. Since then, however, Japan’s economy has not been as spectacular in terms of development.
With the 2020 Olympics, its economy will gain some boost that keeps the capital flow steady, supported by the Bank of Japan’s lax monetary policy.
Japan’s nominal GDP is $5.14 trillion, which at the close of this financial year and is expected to grow to $5.7 trillion.
Japan drops to fourth place when GDP is evaluated in the surplus of PPP; GDP (PPP) in 2018 amounted to $5.594 billion, while GDP per person was $39,306 (24th place).
And speaking about the Public Debt-to-GDP ratio, the nation ranks highest in the world at 236.60%, which is seriously too high.
Why is Japan so rich?
1. Overall national philosophy in all aspects of high efficiency, which includes manufacturing, services & governance with an emphasis on investment.
2. Active promotion of Big & Small corporate companies into a globalized market.
Over the previous few decades, the Chinese economy has seen exponential growth, breaking down the obstacles of a centrally planned communist economy to become the world’s production and export hub.
For its enormous manufacturing and export capacity, the world refers to China as the “world’s factory.”
Over the years, the role of services has gradually risen, and that of manufacturing has relatively decreased as a contribution to China’s GDP per capita.
Back in 1980, China was the seventh world’s largest economy, with $305.35 billion in GDP, while the U.S. was then at $2.86 trillion.
The Asian giant has seen an average annual financial development of 10% per year since it launched market reforms in 1978.
The rate of development has slowed in recent years, although it stays strong compared to other countries.
With relation to PPP GDP, China is the biggest economy with $27.307 trillion of GDP (PPP) in 2020.
China’s GDP (PPP) would amount to $37.06 trillion by 2023. The vast population of China is bringing its GDP percent down to $10,153.
Highly in doubt, about its future stability considering the ongoing trade war, COVID-19 handling accusations, and escalating tensions.
Nevertheless, the state has adopted a fresh approach to the financial policy called the “new normal.”
Authorities are implementing a controlled slow down to prevent overheating the market, which has been slowing development year after year since 2010.
In 2020, we expect the economy to develop by 6.3 percent, which is nothing to look at but a far cry from the annual growth of over 10 percent seen not too long ago.
How China is developing so fast?
1. Despite being a communist country and by adopting ‘Economic Capitalism,’ it opened doors to a new Globalized Market.
2. Extreme Manufacturing & low costs exports.
3. An authoritarian government can focus on long-term plans rather than short-term policies to please the public.
4. Very low artificial interest rates.
1. United States of America
Since 1871, the U.S. has maintained its place as the world’s biggest economy.
The U.S. is often referred to as a financial superpower, and this is because the best economy is almost a third of the global capital supported by modern infrastructure, technology, and natural resource wealth.
While the U.S. industry is service-oriented, adding nearly 80% of its GDP, the production adds only about 15% of its output.
The US also has the world’s most technologically strong economy with diverse sectors accounting oil, iron, automotive, aerospace, chemicals, electronics, food processing, and consumer goods.
Large U.S. corporations also perform a significant part on the worldwide level, with over one-fifth of the Fortune Global 500 companies coming from the U.S. GDP is forecast to expand by 2.5% in 2019 and by 1.7% in 2020.
Why the USA is so rich?
I frankly cannot answer this question in a very short answer, the main reason is,
America was, is & will be forever, the Land of Opportunity which attracts talent all across the world since the country formed.
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