A study conducted by international data experts, World Meters, has revealed that the United States economy is still the largest in the world. A spokesperson for World Meters explains why the US — and the other nine countries — made it onto their top ten list.
What makes a good economy?
Our research, which analysed nominal Gross Domestic Product (GDP) in 2022 from 216 countries, found that the following countries have the largest economies in the world.
Reader's Roadmap
1. United States
According to our research, the US produced just over $25 trillion in goods and services last year, putting it at the top of the list.
The US is the most successful country in terms of its economy for several reasons:
- An entrepreneurial culture that encourages hard work and long hours
- A decentralized government
- Positive regulatory environments
- Advanced research universities
2. China
China comes second, which — despite being considered a developing country — produced £18.3 trillion in goods and services last year.
The Chinese economy is one of the largest, fastest-growing economies in the 21st century.
The country has been the largest contributor to global growth since the 2007-2008 financial crisis, and its influence on the global economy continues to increase.
Additionally, China’s Belt and Road Initiative — a strategy that plans to develop two new trade routes connecting China with the rest of the world — looks set to grow China’s economy even further.
3. Japan
Japan comes third with a nominal GDP of £4.3 trillion.
As well as being one of the world’s most innovative countries, Japan is known for its highly skilled and qualified workforce.
It is the largest producer of electrical goods and the third largest automobile manufacturer. These factors all contribute to making the country’s economy the third biggest in the world.
4. Germany
In fourth place is Germany, thanks to its production of goods and services totalling just over $4 trillion in value in 2022.
The biggest drivers of Germany’s economy are its service industries, namely healthcare, tourism and telecommunication.
Again it has a skilled workforce and technological expertise, as well as a highly-developed infrastructure.
5. India
India is one of three developing countries that appear on our top ten list. It takes fifth place for its nominal GDP of nearly $3.5 trillion.
This is thanks to its booming technology, manufacturing and service sectors.
Some factors that have contributed to India’s economic growth in recent years include
- Structural reforms to remove bottlenecks to investment
- Reducing minimum capital requirements
- Making it easier to apply for necessary licenses
6. United Kingdom
The UK economy is the sixth largest in the world, with a nominal GDP of nearly $3.2 trillion.
In terms of GDP, the UK has the second-largest economy in Europe. Its economy is driven by its large service sector, especially in the areas of finance, business and insurance.
7. France
France ranks seventh for producing goods and services totalling nearly $2.8 trillion last year.
As one of the most popular holiday destinations in the world, France has a thriving tourism industry, which is one of the reasons why the country’s GDP is among the top ten in the world. Some of the other reasons are that France:
- Is a major player when it comes to foreign trade
- Encourages investors with rigorous protection of property rights, and an efficient regulatory framework
- Has 31 companies in the Fortune 500
8. Canada
In eighth place is Canada, with a nominal GDP of $2.2 trillion.
Since 1995, Canada has been a key member of the World Trade Organization (WTO), and thanks to its 15 Free Trade Agreements (FTAs), the country has extensive trading ties with numerous nations.
Its booming economy can also be attributed to its highly-qualified workforce and government support with setting up new businesses.
9. Russia
Russia takes ninth place, with its nominal GDP of $2.1 trillion.
Russia’s economy has grown substantially since the 1990s when it privatized its energy and defense sectors.
The country’s economy is driven by oil, natural gas and energy revenue.
10. Italy
Italy’s production of goods and services totalled nearly $2 trillion in 2022, putting it in tenth place in the study.
The country makes it onto the top ten list for its consumer goods industry. It is a large manufacturer and exporter of a wide variety of products, including machinery, automobiles, pharmaceuticals, furniture, food and clothing. It is the largest hub for luxury goods in Europe and the third-largest luxury hub in the world.
The country is also recognised for its influential and forward-thinking business economic sector and — as the world’s largest wine producer — its competitive agricultural sector.
Which countries have the lowest GDP?
At the other end of the scale, the country with the lowest GDP is the Polynesian island of Tuvalu. According to the findings, it only produced $64 million in goods and services in 2022.
In second place is the Caribbean island of Montserrat, with a slightly higher nominal GDP of $68 million, followed by another island, Nauru. It has the third-lowest economy in the world, with a nominal GDP of just $134 million.
Interestingly, eight of the ten countries with the lowest GDP are in Oceania, with the remaining two located in the Caribbean.
The ten countries with the lowest GDP are as follows:
|
Rank |
Country |
GDP (Million $) |
|
1 |
Tuvalu |
64 |
|
2 |
Montserrat |
68 |
|
3 |
Nauru |
134 |
|
4 |
Kiribati |
207 |
|
5 |
Palau |
226 |
|
6 |
Anguilla |
258 |
|
7 |
Marshall Islands |
271 |
|
8 |
Cook Islands |
283 |
|
9 |
Federated States of Micronesia |
428 |
|
10 |
Tonga |
501 |
What is GDP?
Gross Domestic Product — or GDP — is the most common way to estimate the size of a country’s economy. It is a monetary measure of the market value of all of a country’s finished goods and services during a specific time period. This time period is normally a year.
A country’s GDP can fluctuate, but this isn’t usually enough to shift the top economies from their positions.
How is GDP measured?
There are several ways to measure and compare the GDPs of different countries:
Nominal
The most common way to measure GDP is to calculate spending on new consumer goods, new investment spending, government spending and the value of exports minus imports (net exports).
To compare countries, local prices and currencies are converted into US dollars using currency market exchange rates.
Purchasing Power Parity (PPP)
PPP is an alternative way to compare different countries’ GDPs. Rather than using currency exchange rates, currencies are adjusted based on what basket of goods can be bought in those countries. This is to account for the cost of living in different countries.
GDP growth
An estimate of how fast a country’s economy is growing can be given from the annual percentage growth rate of nominal GDP in local prices and currencies.
GDP per capita
To measure how much a country’s economy produces per person, nominal GDP is divided by the country’s population.
GDP per capita can also be used as a rough estimate of income or standard of living for people in a particular country.
Summary
So, there you have it. The United States economy is still the largest in the world, whilst China, Japan, Germany, India, the UK, France, Canada, Russia and Italy are also in the top ten for their skilled workforces, highly-developed infrastructures and booming technology and service sectors.