Top 10 Economies of the World

Top 10 economies of the world include United States in the top, China at second, and third position is taken by Japan, based on the economical data till 2019.

GDP (Gross Domestic Product) is an estimate of the total value of finished goods and services produced in a country’s borders during a specified period, usually a year. GDP is popularly used to estimate the size of a country’s economy. GDP is most commonly measured by using the expenditure method, which calculates GDP by adding up spending on new consumer goods, new investment spending, government spending, and the value of net exports (exports minus imports).

Throughout most of the world, countries’ GDPs fluctuate with the phases of different economic cycles, against a backdrop of longer-term economic growth over time. However, it’s interesting to see that despite these ups and downs, the top economies as measured by GDP don’t budge easily from the positions they hold. Compared to the top 10 economies in 2000, our research has found that no countries in the top 10 budged from their place. But there have been some big movers within the list. China and India moved up into second and fifth place, respectively, having been in sixth place and 13th place in 2000.

While 2019 is the most recent annual data available for these countries, the COVID-19 pandemic has had a major impact on economies across the world. Because it has slashed energy prices, cratered tourism, lowered trade volumes, and shuttered stores due to quarantines, countries have seen record-breaking declines in GDP. While many economies have begin to recover in the 3rd quarter of 2020, most have not yet recovered to pre-pandemic GDP levels. China is a notable exception, and it’s currently on track to be the only major economy to end 2020 with a larger GDP than it started with.

This article mentions several popular ways to measure GDP, all of which are drawn from the World Bank database:

• Nominal GDP in Current U.S. Dollars: This is the most basic and common way of measuring and comparing GDP among countries, using local prices and currencies converted into U.S. dollars using currency market exchange rates.³ This is the number that was used to determine the countries’ rankings in the top 25 list.
• Purchasing Power Parity (PPP) Adjusted GDP in Current International Dollars: This is an alternative way of comparing nominal GDP among countries, adjusting currencies based on what basket of goods they could buy in those countries rather than currency exchange rates. This is a way to adjust for the difference in the cost of living between different countries.
• GDP Growth: This is the annual percent growth rate of nominal GDP in local prices and currencies, which estimates how fast a country’s economy is growing.
• GDP Per Capita, in Current U.S. Dollars: This is nominal GDP divided by the number of people in a country. GDP per capita measures how much a country’s economy produces per person, rather than in total. This can also act as a very rough measure of income or standard of living for individuals living in a country.

Throughout this list and article, the term GDP refers to nominal GDP in current U.S. dollars.