GDP — Gross Domestic Product

Gross Domestic Product (GDP) vs. Gross National Product (GNP)

GDP - Gross Domestic Product

GDP (or Gross Domestic Product) and GNP (Gross National Product) measure the size and strength of an economy but are calculated and used in different ways.

GDP versus GNP comparison chart GDPGNPStands forDefinitionFormula for CalculationUsesApplication (Context in which these terms are used)Layman UsageCountry with Highest Per Capita (US$)Country with Lowest Per Capita (US$)Country with Highest (Cumulative)
Gross Domestic ProductGross National Product
An estimated value of the total worth of a country’s production and services, within its boundary, by its nationals and foreigners, calculated over the course on one year.An estimated value of the total worth of production and services, by citizens of a country, on its land or on foreign land, calculated over the course on one year.
GDP = consumption + investment + (government spending) + (exports − imports).GNP = GDP + NR (Net income inflow from assets abroad or Net Income Receipts) — NP (Net payment outflow to foreign assets).
Business, Economic Forecasting.Business, Economic Forecasting.
To see the strength of a country’s local economy.To see how the nationals of a country are doing economically.
Total value of products & Services produced within the territorial boundary of a country.Total value of Goods and Services produced by all nationals of a country (whether within or outside the country).
Qatar ($102,785)Luxembourg ($45,360).
Malawi ($242).Mozambique ($80).
USA ($17.42 Trillion in 2014).USA (~ $11.5 Trillion in 2005).

GDP stands for Gross Domestic Product, the total worth estimated in currency values of a nation’s production in a given year, including service sector, research, and development.

That translates to a sum of all industrial production, work, sales, business and service sector activity in the country. Usually this is calculated over a period of one year, but there may be analysis of short and long term trends to be used for economic forecast.

Gross Domestic Product can also be calculated on a per capita (or per person) basis to give a relative example of the economic development of nations.

GNP Definition

GNP stands for Gross National Product. In general terms, GNP means the total of all business production and service sector industry in a country plus its gain on overseas investment.

In some cases GNP will also be calculated by subtracting the capital gains of foreign nationals or companies earned domestically.

Through GNP an accurate portrait of a nation’s yearly economy can be analyzed and studied for trends since GNP calculates the total income of all the nationals of a country.

This gives a far more realistic picture than the income of foreign nationals in the country as it is more reliable and permanent in nature. Gross National Product can also be calculated on a per capita basis to demonstrate the consumer buying power of an individual from a particular country, and an estimate of average wealth, wages, and ownership distribution in a society.

Here is a video of economist Phil Holden explaining the difference between GNP and GDP and talking about how they are measured and how accurate they are.


GDP of a country is defined as the total market value of all final goods and services produced within a country in a given period of time (usually a calendar year). It is also considered the sum of value added at every stage of production (the intermediate stages) of all final goods and services produced within a country in a given period of time.

The most common approach to measuring and understanding GDP is the expenditure method:

GDP = consumption + investment + (government spending) + (exports – imports), or,

GDP = C + I + G + (X-M)

How GNP is calculated

There are various ways of calculating GNP numbers. The expenditure approach determines aggregate demand, or Gross National Expenditure, by summing consumption, investment, government expenditure and net exports.

The income approach and the closely related output approach sum wages, rents,interest, profits, non income charges, and net foreign factor income earned.

The three methods yield the same result because total expenditures on goods and services (GNE) is equal to the value of goods and services produced (GNP) which is equal to the total income paid to the factors that produced the goods and services (GNI).

Expenditure Approach to calculating GNP:GNP = GDP + NR (Net income from assets abroad (Net Income Receipts)).

Applications of GDP and GNP numbers

GDP and GNP figures are both calculated on a per capita basis to give a portrait of a country's economic development. GDP (or Gross Domestic Product) may be compared directly with GNP (or Gross National Product), to see the relationship between a country's export business and local economy.

A region's GDP is one of the ways of measuring the size of its local economy whereas the GNP measures the overall economic strength of a country. These figures can also be used to analyze the distribution of wealth throughout a society, or the average purchasing power of an individual in the country etc.

Increase in exports of a country will lead to increase in both GDP and GNP of the country. Correspondingly, increase in imports will decrease GDP and GNP. However, sometimes increase in exports might only lead to increase in GDP and not GNP.

The exact relationship will depend on the nationality status of the company doing the export or import. E.g. if Microsoft Corporation has a 100% owned subsidiary in India, and that office exports US$2 Billion worth of services India, then US$2 Billion will be added to the GDP of India.

However, it will not be added to the GNP figure since the export is done by a US company and not an Indian company.


GDP is perhaps the most widely used metric to measure the health of economies. But some economists have argued that GDP is a flawed metric because it does not measure the economic well being of society.

For example, it's possible that GDP is going up but median income going down and poverty rate increasing. GDP also does not measure environmental impact of growth, nor sustainability.

Other important metrics include health of the population, infant mortality rates, and malnutrition rates, none of which are captured by GDP.

Here's Nobel laureate Joseph Stiglitz offering a criticism of GDP. And at about the 4:45 mark, he talks about the difference between GDP and GNP:

Stiglitz says that around 1990, GDP supplanted GNP as the primary measure of economic progress. He says that GNP measures the income of the people within the country whereas GDP measures economic activity in the country.

If economic activity occurs in the country but the income from this activity accrues to foreigners, it will still be counted in GDP but not in GNP. He cites the example of privatized mining.

Often the state gets a royalty of 1-2% but the income from privatized, foreign-owned mines accrues largely to shareholders. (Also see Stiglitz's article: GDP Fetishism).

Social Progress Index

The Social Progress Index was designed to measure non-economic indicators of well-being such as literacy rates, child mortality rates, shelter, access to water etc. The Economist plotted SPI data against per capita GDP to see which countries are «punching above their weight» in terms of social progress.

SPI (Social Progress Index) vs. per capita GDP. Source: The Economist

The chart reveals interesting insights about the effect or correlation of GDP on well-being in society. In general, the higher the per capita GDP, the higher the SPI. This is represented by the red line that plots the «average» curve.

Countries above the red line are those where social progress indicators are better than per capita GDP would suggest. For example, Iran and Costa Rica have similar per capita GDP. However, Costa Rica performs significantly better than Iran on measures of social progress. Another example contrasts Brazil and UAE.

Both are similar in their SPI scores even though UAE has a significantly higher GDP per person.

Examples: U.S. and Ireland

In 2010, U.S. GDP was $14.59 trillion.[1] In the same year, the GNP was $14.64 trillion.[2] The numbers for the U.S. are not very divergent because U.S. income receipts and payments are roughly in balance.

On the other hand, Ireland GDP in 2010 was $211.39 billion[3] and GNP $149.54 billion.[4]


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Валовой внутренний продукт (ВВП) (Gross Domestic Product). Определение, значение термина — глоссарий Альпари

GDP - Gross Domestic Product

Термин ВВП используется при проведении оценки экономического состояния рынка на мировом уровне или отдельно взятого государства. Появилось понятие в 1934 году, его предложил использовать американский экономист Саймон Смит. Значение ВВП отражается в национальной или иностранной валюте в зависимости от цели, для которой оно определяется.

Как расшифровывается ВВП простыми словами

Произошел термин от фразы «Валовой внутренний продукт» или сокращенно «ВВП» (от англ. Gross Domestic Product, GDP). Данный показатель отражает коммерческую стоимость всего объема изготовленных за год товаров и оказанных услуг.

В расчет берутся все отрасли экономики, включая экспортные, связанные с потреблением и накоплением товарно-материальных ценностей.

До начала применения этого показателя в 1930-х годах оценку экономического состояния страны никто не проводил.

ВВП считается ключевым макроэкономическим показателем государства.

Выделяют три разновидности ВВП:

  • Номинальный. Не учитывает наличие и уровень инфляции.
  • Реальный. Вычисляется с учетом инфляционных процессов.
  • По паритету покупательной способности на единицу населения.

В последнем случае расчеты ведутся, исходя из валового продукта и населения страны.

Но во всех вариантах исчисления учитываются товары / услуги без исключения: автомобили и бензин, путевки и конфеты, бытовая техника и стратегические запасы зерна.

Показатель не зависит от того, применяются ли учитываемые товары в производстве, реализуются ли они конечному потребителю или экспортируются в другие страны.

Номинальный ВВП

Период, за который рассчитывается валовый внутренний продукт, равен календарному (бюджетному) году. Это происходит из-за особенностей государственного обеспечения регионов.

В расчет берется, как затратная часть, так и налоговые / иные сборы с коммерческих предприятий, позволяющие пополнять бюджет.

Производят вычисления по утвержденным методикам, что гарантирует точность, сравнимость результатов за несколько периодов.

Номинальное значение ВВП вычисляется простым суммированием валового продукта.

Номинальный ВВП рассчитывается и определяется, исходя из цен нынешнего года. При этом учитываются изменения стоимости каждого товара / услуги и реальное производство (фактически выпущенная продукция, выполненные работы).

Номинальное значение получить проще, но оно не позволяет проводить сравнительный анализ между странами. Также затрудняется сравнение периодов, т. к.

на реальное значение ВВП влияет инфляция, значительно изменяющаяся по значению от года к году.

Реальный ВВП

Более информативным оказывается значение реального ВВП. Именно такое значение дает точное определение периода экономики в государстве — наблюдается кризисный спад или сохраняется научно-технический рост. Реальный ВВП не зависит от курсовых колебаний национальной валюты в отношении доллара США, иных иностранных валют.

Формула вычисления:

Реальный ВВП = Номинальный ВВП / ОУЦ,

где ОУЦ — общий уровень цен, рассчитываемый по средневзвешенной стоимости услуг и продукции на конкретный момент времени. Показатель позволяет учитывать имеющуюся инфляцию и сравнивать благосостояние населения страны в разные периоды одного года или одни и те же периоды нескольких лет.

Вычисление показателя ВВП требует точных данных по валовому производству.

Иногда формулу расчета реального ВВП переделывают — соотношение номинального ВВП к индексу цен. Последнее значение определяется делением цен текущего года на цены базисного года (умноженное на 100%). Вместо индекса цен можно брать показатель ИПЦ (индекс потребительских цен). Он определяется на базе стоимости той продукции, что включена в состав потребительской корзины.

Ключевой особенностью значения реального ВВП является расчет на базе фактически произведенных товаров без учета оказанных услуг. Используются только стоимостные показания изготовителей, доступные после передачи данных в органы статистики. Любые показатели, используемые при вычислении ВВП, обычно доступны частным организациям и государственным органам власти.

Как рассчитывается ВВП

Размер ВВП РФ можно узнать на официальном сайте Росстата, где публикуются данные различных периодов. Применяются три основных способа расчетов, результаты которых в итоге оказываются одинаковыми.

Расчетами занимаются экономисты органов статистики.

Методики основаны на вычислениях:

  • По расходам. В расчет берутся потребительские, государственные, экспортные и инвестиционные виды расходов. Здесь в большей мере учитывается обеспечение бюджетной сферы и военных нужд государства, внедрение нововведений в производстве и методах подготовки персонала.
  • По доходам. По-другому способ называется распределительным. В итоговый показатель включены: национальный доход вместе с косвенными налогами, доход от экспорта и амортизационные отчисления. В дополнение к основной задаче показывает наличие дефицита или излишков обеспечения производственных предприятий.
  • По добавленной стоимости. По-другому производственный метод. Суммируется объем добавленной стоимости по всем существующим отраслям. На значение влияет как сам уровень наценки, так и затратная часть, т. е. повысить показатели можно лишь за счет уменьшения себестоимости производства.

Способ вычисления выбирается, исходя из конкретных целей, имеющихся показателей по экономике. В зависимости от цели валовый внутренний продукт может рассчитываться в:

  • Национальной валюте (для России — это рубли).
  • Иностранной валюте по текущему биржевому курсу (в отношении рубля).
  • Долларах США.

Последнее популярно при сравнении показателей нескольких государств. Осуществляется последовательный перевод национальной валюты каждой страны в одну, используемую повсеместно. В результате появляется возможность сравнительной оценки стран, составления общих рейтингов, их разделения на категории по состоянию экономики.

В каких целях используется показатель ВВП

Наиболее известным применением показателя валового внутреннего продукта является оценка экономического роста. ВВП может представляться как в абсолютном виде, так и в расчете на единицу населения государства. Во втором случае рост / падение уровня населения играет существенную роль наравне с производственными факторами.

Благодаря оценке ВВП легко выявить рост или падение экономики.

Валовый внутренний продукт позволяет оценивать следующие показатели:

  • Национальный доход государства.
  • Эффективность хозяйственной деятельности.
  • Степень активности субъектов экономики.
  • Направление развития экономики страны.

Благодаря оценке абсолютного значения ВВП в определенные периоды легко понять динамику, качество изменений в экономике. Рост населения в государстве однозначно влияет на уровень жизни отрицательно, если валовый продукт остается на одном и том же значении. При тенденции снижения рождаемости / повышения смертности уровень жизни отдельно взятого гражданина возрастает.

Значение показателя ВВП (абсолютное) напрямую влияет на ценность национальной валюты на мировом рынке, ее нахождение в корзине валют, используемой для вычисления различных финансовых индексов вроде DXY (Индекс доллара США). Высокое значение воспринимается как показатель богатого положения страны в целом.

Внутри же уровень жизни может колебаться кардинально: обеспеченные люди становятся еще более богатыми, а бедные — получают очередное ухудшение в уровне своей жизни. Поэтому во время сравнения учитывают возможность анализа лишь макроэкономического состояния экономики.

Какие показатели рассчитывают вместе с ВВП

По одному лишь значению ВВП достаточно трудно давать объективную оценку экономической ситуации в стране, поэтому при подготовке аналитических и сравнительных отчетов берут во внимание еще несколько показателей.

Объективной считается оценка, учитывающая несколько финансовых показателей.

Наиболее полезны следующие величины:

  • Валовый национальный продукт (ВНП). Отражает стоимость всех ценных бумаг на рынке государства, эмитированных резидентами страны.
  • Чистый национальный продукт. Вычисляется путем вычитания из показателя ВНП затрат на амортизацию (субсидирование направлений производства с истощенным запасом ресурсов).
  • Фактический ВВП. Значение с учетом вероятной неполной занятости населения и отражения реализованных экономических показателей.
  • Потенциальный ВВП. Расчет ведется, исходя из полной занятости и возможностей производственных, иных мощностей.

При изучении перечисленных показателей выявляется истинное благополучие населения, включая возможность разделения результатов по отдельным регионам. Когда речь идет о сравнении различных государств, такой способ менее подходит, т. к. каждый из исследуемых субъектов может обладать определенными особенностями, несочетающимися с другими показателями.

Иногда показатели разделяют на интенсивные и экстенсивные.

К первым относится рост динамики модернизации производства, совершенствование управленческой деятельности, повышение уровня сотрудников, распределение ресурсов между различными отраслями.

Ко вторым обычно относят земельные, природные, трудовые ресурсы. Речь идет о привлечении дополнительного количества работников, повышении уровня технической оснащенности средствами автоматизации.

Показатели ВВП России и Европы

Сопоставление значений валового внутреннего продукта различных стран осуществляется международными организациями вроде ООН, МВФ. Сравнительная оценка охватывает большое количество государств различного уровня в развитии экономики, что позволяет составлять общий рейтинг их благосостояния по итогам вычислений.

Показатели ВВП некоторых стран взаимосвязаны. Речь идет о наличии торговых отношений, предполагающих взаимный экспорт больших объемов продукции. Снижение его уровня с одной стороны уменьшает валовый продукт экспортера, с другой стороны — стимулирует собственное производство стран, куда перестали поставляться товары. Это относится и к сектору государственных закупок.

Чем меньше власти стимулируют производство, тем больше теряется стабильность ВВП, т. к. показатель попадает под влияние коммерческих структур, иногда преследующих другие цели, несовпадающие с государственными. Повысить данный уровень можно ограничением импорта и принудительным переводом рынка на отечественные продукты.


Finance & Development

GDP - Gross Domestic Product

Updated: February 24, 2020

Finance & Development

Tim Callen

When it is growing, especially if inflation is not a problem, workers and businesses are generally better off than when it is not

Many professions commonly use abbreviations.

To doctors, accountants, and baseball players, the letters MRI (magnetic resonance imaging), GAAP (generally accepted accounting principles), and ERA (earned run average), respectively, need no explanation.

To someone unfamiliar with these fields, however, without an explanation these initialisms are a stumbling block to a better understanding of the subject at hand.

Economics is no different. Economists use many abbreviations. One of the most common is GDP, which stands for gross domestic product.

It is often cited in newspapers, on the television news, and in reports by governments, central banks, and the business community. It has become widely used as a reference point for the health of national and global economies.

When GDP is growing, especially if inflation is not a problem, workers and businesses are generally better off than when it is not.

Measuring GDP

GDP measures the monetary value of final goods and services—that is, those that are bought by the final user—produced in a country in a given period of time (say a quarter or a year). It counts all of the output generated within the borders of a country.

GDP is composed of goods and services produced for sale in the market and also includes some nonmarket production, such as defense or education services provided by the government. An alternative concept, gross national product, or GNP, counts all the output of the residents of a country.

So if a German-owned company has a factory in the United States, the output of this factory would be included in U.S. GDP, but in German GNP.

Not all productive activity is included in GDP. For example, unpaid work (such as that performed in the home or by volunteers) and black-market activities are not included because they are difficult to measure and value accurately.

That means, for example, that a baker who produces a loaf of bread for a customer would contribute to GDP, but would not contribute to GDP if he baked the same loaf for his family (although the ingredients he purchased would be counted).

Moreover, “gross” domestic product takes no account of the “wear and tear” on the machinery, buildings, and so on (the so-called capital stock) that are used in producing the output. If this depletion of the capital stock, called depreciation, is subtracted from GDP we get net domestic product.

Theoretically, GDP can be viewed in three different ways:

● The production approach sums the “value-added” at each stage of production, where value-added is defined as total sales less the value of intermediate inputs into the production process. For example, flour would be an intermediate input and bread the final product; or an architect’s services would be an intermediate input and the building the final product.

● The expenditure approach adds up the value of purchases made by final users—for example, the consumption of food, televisions, and medical services by households; the investments in machinery by companies; and the purchases of goods and services by the government and foreigners.

● The income approach sums the incomes generated by production—for example, the compensation employees receive and the operating surplus of companies (roughly sales less costs).

GDP in a country is usually calculated by the national statistical agency, which compiles the information from a large number of sources. In making the calculations, however, most countries follow established international standards.

The international standard for measuring GDP is contained in the System of National Accounts, 1993, compiled by the International Monetary Fund, the European Commission, the Organization for Economic Cooperation and Development, the United Nations, and the World Bank.

Real GDP

One thing people want to know about an economy is whether its total output of goods and services is growing or shrinking. But because GDP is collected at current, or nominal, prices, one cannot compare two periods without making adjustments for inflation.

To determine “real” GDP, its nominal value must be adjusted to take into account price changes to allow us to see whether the value of output has gone up because more is being produced or simply because prices have increased.

A statistical tool called the price deflator is used to adjust GDP from nominal to constant prices.

GDP is important because it gives information about the size of the economy and how an economy is performing. The growth rate of real GDP is often used as an indicator of the general health of the economy. In broad terms, an increase in real GDP is interpreted as a sign that the economy is doing well.

When real GDP is growing strongly, employment is ly to be increasing as companies hire more workers for their factories and people have more money in their pockets. When GDP is shrinking, as it did in many countries during the recent global economic crisis, employment often declines.

In some cases, GDP may be growing, but not fast enough to create a sufficient number of jobs for those seeking them. But real GDP growth does move in cycles over time. Economies are sometimes in periods of boom, and sometimes in periods of slow growth or even recession (with the latter often defined as two consecutive quarters during which output declines).

In the United States, for example, there were six recessions of varying length and severity between 1950 and 2011. The National Bureau of Economic Research makes the call on the dates of U.S. business cycles.

Comparing GDPs of two countries

GDP is measured in the currency of the country in question. That requires adjustment when trying to compare the value of output in two countries using different currencies. The usual method is to convert the value of GDP of each country into U.S. dollars and then compare them.

Conversion to dollars can be done either using market exchange rates—those that prevail in the foreign exchange market—or purchasing power parity (PPP) exchange rates.

The PPP exchange rate is the rate at which the currency of one country would have to be converted into that of another to purchase the same amount of goods and services in each country. There is a large gap between market and PPP-based exchange rates in emerging market and developing countries.

For most emerging market and developing countries, the ratio of the market and PPP U.S. dollar exchange rates is between 2 and 4.

This is because nontraded goods and services tend to be cheaper in low-income than in high-income countries—for example, a haircut in New York is more expensive than in Bishkek—even when the cost of making tradable goods, such as machinery, across two countries is the same. For advanced economies, market and PPP exchange rates tend to be much closer. These differences mean that emerging market and developing countries have a higher estimated dollar GDP when the PPP exchange rate is used.

The IMF publishes an array of GDP data on its website ( International institutions such as the IMF also calculate global and regional real GDP growth.

These give an idea of how quickly or slowly the world economy or the economies in a particular region of the world are growing.

The aggregates are constructed as weighted averages of the GDP in individual countries, with weights reflecting each country’s share of GDP in the group (with PPP exchange rates used to determine the appropriate weights).

What GDP does not reveal

It is also important to understand what GDP cannot tell us. GDP is not a measure of the overall standard of living or well-being of a country.

Although changes in the output of goods and services per person (GDP per capita) are often used as a measure of whether the average citizen in a country is better or worse off, it does not capture things that may be deemed important to general well-being. So, for example, increased output may come at the cost of environmental damage or other external costs such as noise.

Or it might involve the reduction of leisure time or the depletion of nonrenewable natural resources. The quality of life may also depend on the distribution of GDP among the residents of a country, not just the overall level.

To try to account for such factors, the United Nations computes a Human Development Index, which ranks countries not only GDP per capita, but on other factors, such as life expectancy, literacy, and school enrollment. Other attempts have been made to account for some of the shortcomings of GDP, such as the Genuine Progress Indicator and the Gross National Happiness Index, but these too have their critics.

Tim Callen is an Assistant Director in the IMF’s External Relations Department.


GDP Ranked by Country 2020

GDP - Gross Domestic Product

Gross Domestic Product (GDP) is the monetary market value of all final goods and services made within a country during a specific period. GDP helps to provide a snapshot of a country’s economy and can be calculated using expenditures, production, or incomes.

World GDP

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 is 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 the 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 is 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 the 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, the nominal GDP is typically used to measure and compare the size of national economies.

Nominal GDP Rankings by Country

What are the largest economies in the world? According to the International Monetary Fund, these are the highest ranking countries in the world in nominal GDP:

  1. United States (GDP: 20.49 trillion)
  2. China (GDP: 13.4 trillion)
  3. Japan: (GDP: 4.97 trillion)
  4. Germany: (GDP: 4.00 trillion)
  5. United Kingdom: (GDP: 2.83 trillion)
  6. France: (GDP: 2.78 trillion)
  7. India: (GDP: 2.72 trillion)
  8. Italy: (GDP: 2.07 trillion)
  9. Brazil: (GDP: 1.87 trillion)
  10. 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.

United States

The United States has been the world’s largest economy since 1871. The nominal GDP for the United States is $21.44 trillion. The U.S. GDP (PPP) is also $21.44 trillion. Additionally, the United States is ranked second in the world for the approximate value of natural resources. In 2016, the U.S. had an estimated natural resource value of $45 trillion.

Several factors contribute to the U.S.’s powerful economy. The U.S. is known globally for cultivating a society that supports and encourages entrepreneurship, which encourages innovation and, in turn, leads to economic growth.

The growing population in the U.S. has helped diversify the workforce. The U.S. is also one of the leading manufacturing industries in the world, coming only second to China. The U.S.

dollar is also the most widely used currency for global transactions.


As the second-largest economy in the world, China has seen an average growth rate of 9.52% between 1989 and 2019. China is the second-largest economy considering nominal GDP, at $14.14 trillion, and the largest using GDP (PPP), which is $27.31 trillion. China has approximately $23 trillion in natural resources, 90% of which are rare earth metals and coal.

China’s economic reform program of 1978 was a large success and resulted in the rise in average economic growth from 6% to over 9%. The reform program emphasized the creation of private and rural businesses, easing the state regulations on prices, and investment in workforce education and industrial output. Another driving force behind the growth of China’s economy is worker efficiency.


Japan has the third-largest economy in the world with a GDP of $5.15 trillion. Japan’s GDP (PPP) is $5.75 trillion.

Japan’s economy is market-driven so businesses, production, and prices shift according to consumer demand, not governmental action.

While the 2008 financial crisis took a hit on the Japanese economy and has stunted its growth since then, it is expected that the 2020 Olympics will give it a boost.

The Japanese economy’s strength comes from its electronic goods industry, which is the largest in the world, and its automobile industry, which is the third-largest in the world. Going forward, the Japanese economy faces some large challenges such as a declining population and an ever-increasing debt that, as of 2017, is 236% of its GDP.


The German economy is the fourth-largest in the world with a GDP of $4.0 trillion. Germany has a GDP (PPP) of $4.44 trillion and a per capita GDP of $46,560, the 18th –highest in the world.

Germany’s highly developed social market economy is Europe’s largest and strongest economy and has one of the most skilled workforces.

According to the International Monetary Fund, Germany accounted for 28% of the euro area economy.

Germany’s major industries are car manufacture, machinery, household equipment, and chemicals. Because of its dependency on capital good exports, the economy had a significant setback post-2008 financial crisis.

The German economy is currently in the middle of its fourth industrial revolution due to the Internet and the digital age. Industry 4.

0 is the term used for this transformation, which embraces solutions, processes, and technologies and describes the use of IT and a high degree of system networking in factories.


India’s economy is the fifth-largest in the world with a GDP of $2.94 trillion, overtaking the UK and France in 2019 to take the fifth spot. India’s GDP (PPP) is $10.

51 trillion, exceeding that of Japan and Germany. Due to India’s high population, India’s GDP per capita is $2,170 (for comparison, the U.S. is $62,794).

India’s real GDP growth, however, is expected to weaken for the third straight year from 7.5% to 5%.

India is developing into an open-market economy from its previous autarkic policies.

India’s economic liberalization began in the early 1990s and included industrial deregulation, reduced control on foreign trade and investment, and privatization of state-owned enterprises. These measures have helped India accelerate economic growth.

India’s service sector is the fast-growing sector in the world accounting for 60% of the economy and 28% of employment. Manufacturing and agriculture are two other significant sectors of the economy.

United Kingdom

The United Kingdom, which has a $2.83 trillion GDP, is the sixth-largest economy in the world. In terms of GDP purchasing power parity, the UK is in the ninth spot with a GDP (PPP) of The UK is ranked 23rd for GDP per capita which is $42,558.

The UK is expected to fall to the seventh-largest economy by 2023 with a GDP of $3.27 trillion. In 2016, the UK was the tenth-largest exporter of goods in the world, exporting goods to 160 countries worldwide.

In the 18th century, the United Kingdom was the first country to industrialize.

The service sector dominates the UK economy, contributing about 80% of GDP, particularly the financial services industry. London is the second-largest financial center in the world.

Manufacturing and agriculture are the second- and third-largest sectors in the United Kingdom.

Britain’s aerospace industry is the second-largest in the world and its pharmaceutical industry is the tenth-largest.


France is the third-largest economy in Europe (behind Germany and the UK) and the seventh-largest economy in the world. France has a nominal GDP of $2.71 trillion. France’s GDP per capita is $42,877.

56, the 19th highest in the world, and GDP (PPP) is $2.96 trillion.

According to World Bank, France has unfortunately experienced high unemployment rates in recent years: a 10% unemployment rate was recorded for 2014, 2015, and 2016 and it declined to 9.681% in 2017.

France’s economy is a diversified free-market-oriented economy. The chemical industry is a key sector for France, as well as agriculture and tourism.

France accounts for about one-third of all agricultural land in the European Union and is the sixth-largest agricultural producer and the second-largest agricultural exporter in the world, behind the United States. France is the most visited destination in the world.

Additionally, France ranks 5th in the Fortune Global 500 behind the United States, China, Japan, and Germany with 28 of the 500 biggest companies.


With a nominal GDP of $1.99 trillion, Italy is the eighth-largest economy in the world. In terms of GDP (PPP) Italy’s economy is worth $2.40 trillion and its per capita GDP is $34,260.34. Italy’s economy is expected to expand to $2.26 trillion by 2023. Unfortunately, Italy is experiencing a relatively high unemployment rate of 9.7% and a debt at 132% of GDP.

Fortunately, Italy’s exports are helping to recover the economy. Italy is the eighth-largest exporter in the world, conducting 59% of its trade with other European Union countries.

Before World War II, Italy was primarily an agricultural economy and has now transformed into one of the world’s most advanced nations.

Italy is the second-largest exporter in the European Union, behind Germany, and has a significant trade surplus from exporting machinery, vehicles, food, clothing, luxury goods, and more.


Brazil has the ninth-largest economy in the world and the largest in Latin America with a nominal GDP of $1.85 trillion. Brazil is also the largest and most populous nation in Latin America.

Brazil has the world’s 73rd highest per capita GDP of $8,967 and a GDP (PPP) of $2.40 trillion. The country has an estimated $21.

8 trillion in natural resources, which includes vast amounts of timber, uranium, gold, and iron.

Brazil is a developing free-market economy. From 2000 to 2012, Brazil was one of the fastest-growing major economies in the world. Brazil, however, has one of the most unequal economies in the world.

In 2017, the economic crisis, corruption, and lack of public policies increased the poverty rate and many became homeless.

Six billionaires alone in Brazil are richer than more than 100 million of the poorest Brazilians.


Canada has the tenth-largest economy in the world with a nominal GDP of $1.73 trillion. Canada’s per capita GDP of $46,260.71 is ranked 20th globally while its GDP (PPP) of $1.84 trillion is ranked 17th globally. Canada’s GDP is expected to rise to $2.13 trillion by 2023.

Canada has the fourth-highest estimated value of natural resources of $33.2 trillion. Canada is considered an energy superpower due to its abundant natural resources such as petroleum and natural gas.

According to the Corruption Perceptions Index, Canada is one of the least corrupt countries in the world and one of the world’s top ten trading countries.

Canada ranks above the United States on the Index of Economic Freedom and experiences a relatively low level of income disparity.

IMF data from the April 2018 IMF World Economic Outlook database.

UN data from the July 2018 World Development Indicators.

GDP is in trillions of US dollars.


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