GDP Ranked by Country 2020
What are the countries with the largest economies in the world? Here is a list of the top ten countries with the highest GDP:
As of 2018, only four countries in the world have a GDP per capita in excess of $100,000. These are Monaco (the highest at $166,285), Liechtenstein, Luxembourg and Bermuda, all of which are known for attracting wealthy residents as well as for having very small populations, ranging from 38,155 (Liechtenstein) to 590,321 (Luxembourg). Conversely, at just $247, South Sudan has the world's lowest GDP per capita, and many countries, predominantly in Africa, have a GDP per capita below $1000.
Based on UN and IMF figures, the United States has the largest GDP in the world at $20.4 trillion (IMF) and $18.6 trillion (UN). The second-largest GDP is China's at $14.1 trillion (IMF) and $11.2 trillion (UN). However, the US has a population of 327 million, while China's population is the highest in the world – a massive 1.42 billion (although despite the significant difference, the US also has the third-highest population in the world, behind India in second place with 1.35 billion.
Japan, Germany and the United Kingdom make up the rest of the top five countries with the largest GDPs at $5,167,050, $4,211,640 and $2,936,290 trillion (US$), respectively (based on IMF figures). Many island nations feature on the list of countries with the lowest GDPs. The British Commonwealth nation of Tuvalu is the lowest with a GDP of US$43 million, followed by the Micronesian island of Nauru at $114 million and the Marshall Islands at $205 million. Not surprisingly, these islands also have small populations and correspondingly low GDP per capita figures, ranging from $3,810 (Tuvalu) to $10,078 (Nauru).
The world GDP is the added total of the gross national income for every country in the world. Gross national income takes a country’s GDP, adds the value of income from imports, and subtracts the value of money from exports. The value of gross national income, GNI, differs from that of GDP because it reflects the impact of domestic and international trade.
When the GNIs of every country in the world are added together, the value of imports and exports are in balance. The world economy consists of 193 economies, with the United States being the largest.
As per World Bank estimates, the nominal world GDP in 2017 was $80,683.79 billion. In 2018, the nominal world GDP was $84,835.46 billion in 2018, and it’s projected to be $88,081.13 billion in 2019. In 2018, the growth rate for the world GDP was 3.6%.
Nominal GDP vs. PPP GDP
To compare GDPs around the world, currencies must be converted so that they’re consistent across all countries. There are two main systems of common currency conversion: nominal and PPP. These two approaches to GDP estimation have separate strengths and are generally used for different reasons.
Nominal GDP is useful for large-scope GDP comparison, either for a country or region, or on an international scale. The nominal GDP of an area is determined using up-to-date market prices and shifts according to inflation. By incorporating an area’s inflation rate in the GDP calculation, nominal GDP can indicate when prices rise in an economy. The rate of price increases in an economy are also factored into nominal GDP.
The main downfall of nominal GDP is that it doesn’t account for the living standards in a country - it focuses only on economic growth and performance. Also, generally speaking, nominal GDP can differ significantly from year to year depending on variations in exchange rate.
PPP stands for purchasing power parity. PPP GDP is used to measure both the economic growth and living standards in a country, making it a useful tool in global comparisons. The PPP approach uses exchange rates to convert one country’s currency into the other. Then, using a consistent amount of money, the quantity of goods and services that may be purchased in the countries are compared. For example, PPP may compare the cost of a car in France to the cost of a car in Japan (after using the exchange rate to convert yen to Euros, or vice versa) to analyze the difference in GDP and cost of living between these nations. PPP GDP stays relatively stable from year to year and isn’t significantly impacted by shifts in exchange rate.
PPP GDP can be faulted for the fact that it doesn’t incorporate discrepancies in quality between goods and services in different countries. In general, it’s less exact than nominal GDP and often hinges on estimates rather than calculations. As such, nominal GDP is typically used to measure and compare the size of national economies.
Nominal GDP Rankings by Country
According to the International Monetary Fund, these are the highest ranking countries in the world in nominal GDP:
- United States (GDP: 20.49 trillion)
- China (GDP: 13.4 trillion)
- Japan: (GDP: 4.97 trillion)
- Germany: (GDP: 4.00 trillion)
- United Kingdom: (GDP: 2.83 trillion)
- France: (GDP: 2.78 trillion)
- India: (GDP: 2.72 trillion)
- Italy: (GDP: 2.07 trillion)
- Brazil: (GDP: 1.87 trillion)
- Canada: (GDP: 1.71 trillion)
The Largest Economies in the World
The three largest economies in the world as measured by nominal GDP are the United States, China, and Japan. Economic growth and prosperity are impacted by a wide array of factors, namely investment in workforce education, production output (as determined by investment in physical capital), natural resources, and entrepreneurship. The economies of the U.S., China, and Japan all have a unique combination of these factors that have led to economic growth over time, as outlined below.
The United States of America
The largest economy in the world is that of the United States. A number of circumstances contribute to this, namely support for entrepreneurship, gradual population growth, high average income, low unemployment rates, and high consumer spending. The 2019 nominal GDP for the United States is $21,482.41 billion.
The United States comes in second in the world when it comes to approximate total value of natural resources. In 2016, the country had an estimated natural resource value of $45 trillion. The U.S. is also comes out ahead of every other country in the world when it comes to natural gas and oil production.
The U.S. is known globally for cultivating a society that supports and encourages entrepreneurship. Entrepreneurs create job opportunities and boost the size of the workforce, and an entrepreneurial culture encourages innovation across industries, in turn leading to economic growth. The United States stimulates entrepreneurship by upholding free, unrestricted markets and powerful legal protections for intellectual property.
Population growth is a major contributor to the size of the U.S. economy. While the growth of the U.S. population has slowed in the past decade, immigration and a younger workforce make for a diverse labor market. This provides a boost to the economy, further attracting immigrants to the country.
The U.S. also has one of the leading manufacturing industries in the world, coming in second only to China. This industry employed 12.56 million people in December 2017, a 1.7% increase from the previous year. The record output of the U.S. industrial sector was in the first quarter of 2018 and came out to $2 trillion.
The U.S. dollar is the most widely used currency for global transactions. It’s used as the primary currency in several other countries, which is a process called dollarization. The U.S. dollar is also used at the de facto currency in a number of countries, including Cambodia, Iraq, Aruba, and the Dominican Republic.
China has a steadily and strategically growing economy, with an average growth rate of 9.52% between 1989 and 2019. While China is the second largest economy when considering nominal GDP, it’s the largest economy in the world using PPP.
China has approximately $23 trillion in natural resources. 90% of these natural assets are rare earth metals and coal, giving the country a high potential for energy and oil production.
Worker efficiency is the driving force behind the growth of China’s economy, and this has been the case ever since the country implemented a drastic economic reform program in 1978. Between 1979 and 1994, increases in worker productivity were responsible for over 42% of China’s economic growth.
China’s economic reform program of 1978 emphasized the creation of private and rural businesses, the easing of state regulations on prices, and investment in workforce education and industrial output. The program was, by most counts, a large success and resulted in a rise in average economic growth from approximately 6% pre-reform to 9% post-reform.
Japan’s economy, the third largest in the world according to nominal GDP calculations, is market-driven, meaning that businesses, production, and prices shift according to consumer demand, not governmental action. Japan's economy showed a GDP growth rate of 1.9% in 2017, 1% in 2018, and is estimated at 0.9% in 2019.
Factors contributing to the size of Japan’s economy are their electronic goods industry, which is the largest in the world, and their automobile industry, which is the third largest in the world. Japan’s electronics industry is praised for its innovation, which asserts Japan as a global leader in the field.
Despite its strengths, the Japanese economy faces formidable challenges going forward. The nation’s population is shrinking and predicted to drop below 100 million from 127 million by 2050. Additionally, the country’s ratio of public debt to GDP is the highest among the world’s developed nations; in 2017, national debt stood at 236% in comparison with GDP.
Unlike the U.S. and China, Japan isn’t a leader in natural resources. In fact, it comes up short in natural resources to uphold its rising population and advancing economy. It’s an island country with a volcanic, hilly landscape, which greatly diminishes the nation’s potential for output of agricultural products, petroleum, and raw materials.
GDP is in trillions of US dollars.