An Overview of the Trillion-Dollar Economies in the World
Back in 2018, approximately 76% of the world's GDP came from 16 of the trillion-dollar economies. The number of these nations remained the same during 2019 and 2020. The year 2021 saw an addition of two nations — Iran and The Netherlands — to the ‘trillion-dollar’ club. Today, there are 19 countries with the addition of Saudi Arabia.
Together, these economies make up 80.57% of the global GDP, which stands at $103.47 trillion. The number of trillion-dollar economies is expected to remain the same over the next few years before three nations—Turkey, Switzerland and Taiwan—join in 2026, as per projections.
Here’s an overview of the trillion-dollar economies in the world (based on April 2022 estimates by the IMF).
The United States is the largest economy in the world and continues to dominate close to 25% of the global GDP. The IMF projects the U.S. economy to grow at 3.7% in 2022 and at 2.3% in 2023. The nominal GDP for 2022 is projected at $25.35 trillion and is expected to cross the $30 trillion mark by 2027, constituting 23% of the worldwide GDP. Consumer spending or personal consumption expenditure (PCE) accounts for more than two-thirds of U.S. economic activity. In the present time, inflation continues to occupy the center stage, reaching the highest level in more than four decades, amid tight labor markets. The U.S. has the highest GDP per capita amongst trillion-dollar economies at $76,027.04 and the eighth highest globally.
China, the second-largest economy, is expected to expand by 4.4% in 2022 with a GDP size of $19.91 trillion, equivalent to one-fifth of the worldwide GDP. The country’s GDP per capita is estimated at $14,096.24. China is the only major economies which witnessed growth, albeit at a slow rate of 2.2% in 2020 before it bounced back with 8.1% growth in 2021. China is often dubbed as the ‘world factory’ and has been working on the Made in China 2025 initiative launched in 2015. In November 2021, China unveiled its plan to accelerate smart manufacturing across industries. More than $9 trillion will be added to China’s GDP over the next five years, closing its gap with the U.S. China is a ‘upper middle income’ nation as per the World Bank.
With a GDP size of $4.91 trillion, Japan is the third-largest trillion-dollar economy. Its economy is projected to grow at 2.4% and 2.3% in 2022 and 2023, respectively. Japan ranks among the top global innovation hubs. According to Japan’s official data, its spending on R&D as a percentage of GDP was 3.59% (FY2020). Around 70% of the Japanese economy is governed by the services sector. Japan experienced from two decades of deflation before Abe Shinzo came to power in 2012. The policy package unveiled during his regime to revive the Japanese economy popularly became known as Abenomics. The new regime in Japan has set a target for doubling the inward FDI stocks to 80 trillion yen by 2030. Japan has a GDP per capita of $39,243.37.
Germany is Europe’s largest and the world’s fourth-largest economy with a projected GDP size of $4.26 trillion in 2022. Services is a key sector of its economy, contributing about 70% to its GDP. The country’s economy will expand by 2.1% and 2.7% in 2022 and 2023, respectively. Germany has a robust manufacturing sector with a renowned label “Made in Germany” standing for excellence and innovation with automobiles being its largest industry. Machinery, chemical, electronics and medical technology are some of the other important industries. Germany is the fifth-largest robot market globally with thousands of industrial robots utilized across its industries. Germany’s GDP per capita income is estimated at $51,103.98 for 2022 and will rise to $64,378.27 by 2027.
United Kingdom is the fifth-largest economy in the world with a projected GDP of $3.38 trillion in 2022. IMF projects that U.K. will slide to the sixth spot by 2025 as it be overtaken by India. However, in terms of per capita income, U.K. will see an improvement. The per capita GDP of United Kingdom will move from $49,761.13, twenty-fifth in the world to $65,808.69 by 2027, positioning it at the seventeenth spot. U.K. is largely a service-driven economy with the service industries accounting for around 80% of total economic output and 82% of employment. The service industries include the retail sector, the financial sector, the public sector, business administration, leisure and cultural activities. IMF estimates a 3.7% and 1.2% growth in 2022 and 2023, respectively.
At a projected 8.2% growth rate, India is the fastest growing trillion-dollar economy in 2022. “Over the past decade, the country’s integration into the global economy has been accompanied by economic growth. India has now emerged as a global player,” according to the World Bank. India’s GDP of $3.29 trillion is estimated to reach close to the $5 trillion mark by 2027. In comparison to the other major economies, the gross value added by agriculture and allied sectors to its economy is high at around 18.8% (FY2021-22). The services sector contributes over 50% to India’s GDP with industry contributing around 30%. India’s per capita income stands at $2,342.26 and is expected to be $3,350.08 by 2027. India is classified as a ‘lower middle income’ economy by the World Bank.
The $2.94 trillion French economy enjoys the status of being the most visited country in the world. The country’s economy experienced a contraction of 8% during 2020, before bouncing back by 7% in 2021. IMF projects a 2.9% and 1.4% growth in 2022 and 2023, respectively. At the first Destination France Summit in November 2021, the President of the French Republic set a goal to “Consolidate France’s position as the number one tourist destination in the world.” Back in September 2020, the government unveiled the “France Relance,” a recovery plan with a budget of €100 billion to start building the France of 2030 by transforming the economy by focusing on ecology, competitiveness, and cohesion. The country’s GDP per capita of $44,747.26 is expected to be $54,408.34 by 2027.
Canada’s $2.2 trillion economy is home to abundant and varied natural resources. Canada has the third-largest proven oil reserves globally, behind Saudi Arabia and Venezuela, with around 400,000 jobs supported by the oil and natural gas sector across the country. In 1994, the U.S., Mexico and Canada created the largest free trade region in the world with the North American Free Trade Agreement (NAFTA) for boosting trade and economic growth. On July 1, 2020, the new Canada-United States-Mexico Agreement (CUSMA) came into force with upgraded provisions for trade. Canada ranks fourteenth globally in terms of GDP per capita at $57,405.93. The nation’s GDP is projected to grow at 3.9% and 2.8% in 2022 and 2023, respectively. Canada is the largest economy with no gold reserves.
Italy is the ninth-largest economy with a projected GDP size of $2.06 trillion. The economy experienced a contraction in 2012 and 2013, followed by subdued growth till the pandemic hit, shrinking its economy by 9%. The economy witnessed 6.6% growth in 2021 and is expected to grow at 2.3% and 1.7% in 2022 and 2023, respectively. Italy is the largest agricultural producer in the European Union; the sector accounts for approximately 2% of its GDP. Italy is the second-largest manufacturing nation after Germany in Europe. The government has launched several initiatives to spur the growth of the advanced manufacturing technologies market. Travel and tourism contributed roughly 13% to its GDP in the pre-covid period. Italy is a ‘high income’ country as per the World Bank classification.
Brazil is the largest economy in Latin America and the tenth-largest in the world with a projected GDP of $1.83 trillion in 2022. Brazil is home to more than 60% of the Amazon rainforest, the largest tropical forest in the world. Driven by rising global demand, strong prices and technological advances, Brazil’s agricultural production has grown rapidly over the past two decades. Brazil is well known for its coffee production. In addition to coffee, it is a leading exporter of soybeans, corn, sugar, meat and ethanol. Brazil’s GDP is projected to grow at 0.8% in 2022 and 1.4% in 2023. Brazil is classified as a ‘upper middle income’ economy by the World Bank. Its GDP per capita is $8,570.28 and estimated to be $11,028.16 by 2027.
Russia is the largest country in the world, representing 11% of the world’s land mass. It is the third-largest producer of oil in the world behind the U.S. and Saudi Arabia. Since the setback in 2014, Russia has worked to diversify its economy, reducing dependence on oil and gas exports. Russian non-resource non-energy exports set a record of $193 billion in 2021, an increase of 37% over the previous year. In the wake of Russia’s ongoing military operations in Ukraine, the economy of Russia will contract by around 8.5% in 2022 and another 2.3% in 2023. The size of Russia’s economy in 2022 is projected at $1.83 trillion with a per capita income of $12,574.93. Russia is categorized as ‘upper middle income’ economy by the World Bank.
The Republic of Korea’s economy is expected to grow at 2.5% to a GDP of $1.8 trillion in 2022. Korea will be a $2 trillion economy by 2024. Over the years, Korea has achieved remarkable success in combining rapid economic growth with significant poverty reduction. Fueled by strong exports, “Korea’s real GDP growth averaged 5.45% annually between 1988 and 2019,” as per the World Bank. The country’s 2022 GDP per capita of $34,994.2 is expected to be $44,847.01 by 2027. Bank of Korea’s recent paper has acknowledged that new economy industries (such as semiconductors and secondary batteries) have been leading Korea’s exports and investment in recent times. Further, “the new economy industries are expected to continue their rapid growth over the coming years, leading Korea’s economic growth.”
The Australian economy witnessed a stretch of economic growth since the recession in 1991. IMF estimates a growth rate of 4.2% and a GDP size of $1.75 trillion in 2022. Australia is listed as a ‘high income’ economy as per the World Bank. Mining continues to be the cornerstone of its economy. Australia is the world’s largest producer of lithium and a global top five producer of gold, iron ore, lead, zinc and nickel. The nation holds the huge reserves of uranium and black coal. Mining currently contributes 11.5% to the output. Over the years, the relative importance service sector has risen led by the financial and insurance services. It’s The GDP per capita of $67,464.39 is the eleventh highest in the world and second highest among trillion-dollar nations.
Islamic Republic of Iran
Iran is a founder member of OPEC and holds 13.1% of the proven crude oil reserves. “Iran’s economy is characterized by its hydrocarbon, agricultural, and service sectors, as well as a noticeable state presence in the manufacturing and financial services,” according to the World Bank. The U.S. has continued to imposed restrictions on activities with Iran since 1979, following the seizure of the U.S. Embassy in Tehran. On the other hand, China's purchases of oil from Iran have been hitting record highs in recent months. Iran entered the trillion-dollar club in 2021 and is expected to reach the $2 trillion mark by 2026. With a projected GDP of $1.74 trillion in 2022, Iran is the fourteenth-largest economy with a per capita income of $20,261.01.
With a GDP of $1.43 trillion, Spain is the fifteenth-largest economy in the world. The Spanish economy was hit hard during the pandemic, shrinking by 10.8%. Tourism is an important sector of the country’s economy, accounting for 12.4% of GDP and 12.7% of the employment in the pre-COVID period. The contribution to GDP fell to 5.5% in 2020. Other than tourism, the Spanish economy has a diverse, export-oriented and highly productive manufacturing sector and is known for its construction sector. Spain has set itself the task of reducing carbon emissions by 2050, a challenge which would involve advancing in alternative energies, thereby creating new opportunities for job creation, and economic growth. The Spanish economy is poised to grow at 4.8% and 3.3% in 2022 and 2023, respectively.
Mexico is the sixteenth-largest economy in the world and the second-largest economy in Latin America. Mexico has an abundance of natural resources, including oil. It is one of the largest oil producers in the world, and the fourth-largest in the Americas after the U.S., Canada and Brazil. The economy is expected to grow at 2% during 2022 to reach $1.32 trillion with a per capita income of $10,165.67. According to the World Bank, the nation has not been able to fully utilize its potential: “Over the last three decades, Mexico has underperformed in terms of growth, inclusion, and poverty reduction compared to similar countries. Its economic growth averaged just above 2% a year between 1980 and 2018, limiting progress in convergence relative to high income economies.”
Indonesia, a diverse, archipelago nation is the largest economy in Southeast Asia. With a 5.4% projected growth, it is the third fastest growing trillion-dollar economy in the world. Indonesia is characterized as a ‘lower middle income’ economy by the World Bank. Over the years, Indonesia has made enormous gains in poverty reduction, cutting the poverty rate more than half since 1999 to 9.8% in 2018. Indonesia is among the world’s largest exporter of steam coal, refined tin and nickel ore, and a leading exporter of gold, bauxite, lead, zinc and copper. Indonesia is the largest palm oil producer and exporter. Currently, some commodities are placed under restrictions for exports. Indonesia’s 2022 GDP of $1.29 trillion is expected to grow to $1.86 trillion in the next five years.
Saudi Arabia, officially the Kingdom of Saudi Arabia, is set to join the trillion-dollar club in 2022. The oil driven economy is poised to grow at 7.2%, taking the size of its GDP to $1.04 trillion. Saudi Arabia has 17% of the world’s proven crude oil reserves, second-largest in the world. Saudi Arabia is a founder member of OPEC and contributes 22.4% of its current share. It joined the World Trade Organization in 2005 to gain access to global markets, create jobs and encourage foreign investment. Around 50% of its GDP and 70% of export earnings are governed by the oil and gas sector. Saudi Arabia domiciled Aramco is among the most valued companies in the world. The country’s per capita income is assessed at $28,759.28.
The Netherlands is a geographically a small country occupying a highly strategic commercial location. Europe’s largest port and the fourth-largest airport for cargo are in the Netherlands. The country’s location helped it to become one of the top trading nations in the world. Its economy is projected at $1.01 trillion in size in 2022 with a per capita income of $57,835.73. Netherlands has a thriving service sector and a sound industry for agri-food, horticulture, chemicals, logistics, energy and water technology. The Netherlands aims to have a circular economy by 2050, “a waste-free economy that runs as much as possible on sustainable and renewable raw materials, and in which products and raw materials are reused.” Its per capita GDP is expected to rise to $71,479.37 by 2027.
Disclaimer: The rankings are based on IMF data for Gross Domestic Product released in April 2022. Nominal GDP is mentioned as GDP is at current prices, U.S. dollars. For India, data and forecasts are presented on a fiscal year basis (April – March). GDP per capita, current prices, U.S. dollars is interchangeably written as per capita income. The report has been carefully prepared, and any exclusions or errors in it are totally unintentional. The author has no position in any stocks mentioned. Investors should consider the above information not as a de facto recommendation, but as an idea for further consideration.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.