The Top 10 Economies in 2027

In the next five years, we will see two new nations added to the list of top ten economies with some shifts in positions. According to 2022 estimates, Russia and Italy are the ninth and tenth largest economies in the world, respectively. However, it is projected that Italy will move out of the top ten in 2023 while Russia exits by 2025, making way for two new entrants to the list. In 2022, 66% of the world’s GDP of $101.67 trillion is contributed by the top ten economies, and by 2027, this percentage is projected to be 67% for a GDP of $130.84 trillion.

Here’s an overview of the economies that will be a part of the top ten list in 2027 based on IMF’s October 2022 World Economic Outlook (WEO) database (rankings are subject to change based on subsequent updates by the IMF).

1. United States

2021: 1

2022: 1

2027: 1

The U.S., the largest economy in the world, grew at 5.6% in 2021. However, 2022 has been a difficult year so far with federal reserve springing into action in the backdrop of a conflict. Its real GDP slid into negative terrain during Q1 and Q2. However, during Q3, GDP increased 2.9% thanks to increases in exports and consumer spending, and Q4 figures are expected to be positive as well.

Going by the general definition, the U.S. economy entered a recession with two negative quarters. However, the National Bureau of Economic Research defines a recession as a period when there is “a significant decline in economic activity that is spread across the economy and that lasts more than a few months.” While recessionary fears cloud the U.S., IMF projects the economy to advance by 1.6% in 2022 and 1% in 2023. The size of the U.S., which is poised to be $25.03 trillion in 2022, will be $30.28 trillion by 2027.

2. China

2021: 2

2022: 2

2027: 2

China became the world’s second-largest economy in 2010. It was the sole trillion-dollar economy to see growth in 2020, and it grew at 8.1% in 2021. However, things after haven’t been smooth. October projections for China’s growth during 2022 were pegged at 3.2% with a chance of a downgrade revision soon. Recently, First Deputy Managing Director at IMF Gita Gopinath said that China’s economic outlook has "darkened noticeably."

The world’s second-largest economy is witnessing a slowdown in economic activity amid stringent Covid protocols. Its technology sector suffered a major regulatory crackdown followed by trouble brewing in its real estate sector. “China property sales will drop 26%-28% in 2022, and a further 5%-8% in 2023, as highly leveraged private developers continue to struggle,” according to S&P Global Ratings. The current disruption to its economic trajectory will widen the time it takes to overtake the U.S. to become the world’s largest economy. Its GDP is expected to expand by a little from $17.74 trillion in 2021 to $18.31 trillion in 2022 and to $26.43 trillion by 2027.

3. India

2021: 6

2022: 5

2027: 3

India has emerged as a bright spot amid a scenario of global economic uncertainties. India stands tall backed by strong macroeconomic fundamentals, fiscal discipline, high saving rates, robust domestic demand and demographic trends. India has overtaken the United Kingdom to be the world’s fifth-largest economy. According to IMF’s latest October 2022 outlook, India’s economy is expected to clock a growth of 6.8% in 2022, down by a tad (0.6 percentage point) since the July forecast. With a projected growth of 6.1% for 2023, India is one of the fastest-growing trillion-dollar economies in the world. India is a domestic consumption-led economy with exports contributing roughly 20% to its GDP. Over the years, the rising middle class and corresponding shift in spending pattern have strengthened its consumption. India’s nominal GDP for 2022, which is assessed at $3.47 trillion, is poised to be $5.37 trillion by 2027 based on IMF estimates, which will make India the third-largest economy in the world, pushing Japan down to the fourth spot.

4. Japan

2021: 3

2022: 3

2027: 4

Japan’s economy was displaced as the second-largest economy by China in 2010. With a GDP size of $4.3 trillion for 2022, Japan is currently the third-largest trillion-dollar economy. However, by 2027, it will move down to the fourth spot with a GDP of $5.17 trillion. Japan’s economy is projected to grow at 1.7% and 1.6% in 2022 and 2023, respectively. However, the economy shrank unexpectedly during Q3 2022 at an annualized 0.8% as a weak Yen and higher import costs took a toll on household consumption and businesses. Yen has lost roughly 20% of its value against the U.S. dollar since the start of this year. At the end of October, the Japanese government unveiled a stimulus package equivalent to ¥29.1 trillion, almost equivalent to $200 billion. The package aims to ease the impact on consumers from soaring commodity prices and a falling Yen, by including subsidized electricity and gas bills for households. In 2021, the government set a target for doubling the inward FDI stocks to ¥80 trillion by 2030. 

5. Germany

2021: 4

2022: 4

2027: 5

Germany is Europe’s largest and the world’s fourth-largest economy with a projected GDP size of $4.03 trillion in 2022. It was the third-largest economy until 2007 when China replaced it to grab its spot. Germany is facing the fallout of the military conflict between Russia and Ukraine. “The persistently high energy prices, rising inflation, and the related losses of purchasing power are continuing to impact Germany’s economic outlook. Surveys suggest that both business expectations and consumer sentiment remain at record lows,” according to official statements.

Germany grew by 2.6% in 2021. IMF projects a growth of 1.5% in 2022 and a contraction by 0.3% in 2023. The inflation rate rose further to 10.4% in October, the highest level since December 1951. “We are currently experiencing a severe energy crisis that is increasingly turning into an economic and social crisis,” said Economy Minister Robert Habeck. Germany’s GDP is estimated at $4.92 trillion in 2027.

6. United Kingdom

2021: 5

2022: 6

2027: 6

With a projected GDP of $3.19 trillion in 2022, United Kingdom slid one place to be the sixth-largest economy in the world. IMF had earlier projected U.K. to move to the sixth spot by 2025 as it was to be overtaken by India. In the backdrop of the Russia-Ukraine war, high energy, food and other bills are hitting people hard leaving households with very less to spend on other things impacting the economic growth. According to a poll, around 9 in 10 (93%) adults reported their cost of living had increased compared with a year ago, according to the ONS Opinions and Lifestyle Survey. U.K. is largely a service-driven economy with the service industries accounting for around 80% of total economic output and 82% of employment. IMF estimates a 3.6% and 0.3% growth in 2022 and 2023, respectively. U.K. will continue to remain the sixth-largest economy with a GDP size of $4.45 trillion in 2027.

7. France

2021: 7

2022: 7

2027: 7

France is among the world’s leading tourist destination, and thus suffered heavily during 2020 when the global tourism suffered its worst year on record with international arrivals dropping by 74%, according to the World Tourism Organization. After suffering a 9% contraction in GDP, France grew at 6.8% during 2021. In 2022, the country is expected to grow at 2.5% taking its GDP to $2.77 trillion. Like many European nations, France will witness the negative impact of the ongoing Russia-Ukraine war. However, the revival in tourism has supported the French economy and helped avoid a recession (so far). However, amid higher energy prices, many corporates have already planned production cuts and the probability for a recession during the next six months is increasing. In November, the central bank of France said that it expects a ‘slightly positive growth rate of GDP’ for Q4 2022. In October, IMF projected France to grow at 0.7% in 2022. By 2027, IMF projects its economy to be $3.29 trillion in size, retaining its seventh place.

8. Canada

2021: 9

2022: 8

2027: 8

Canada’s economy was the ninth-largest economy in 2021. With a growth of 3.3% in 2022, its GDP is expected to cross the $2 trillion mark, taking it to the eighth spot. Canada is home to abundant and varied natural resources. The country has the third-largest proven oil reserves globally, behind Saudi Arabia and Venezuela. Canada is the largest economy with no gold reserves. “As a commodity exporter, it has been hit less hard than many other countries have been by the war in Ukraine. Nonetheless, inflation is well above target, housing affordability is a major concern following a long boom that may now have peaked,” reads an IMF report. According to official data, Canada’s real GDP expanded for a fifth consecutive quarter, increasing 0.7% in Q3 2022. IMF October data projects Canada’s 2023 growth at 1.5% by 2027. Its economy will be $2.73 trillion in size and placed steadily at the eighth spot.

9. Brazil

2021: 13

2022: 12

2027: 9

Brazil, the largest economy in Latin America, is placed at the 12th spot as per 2022 GDP estimates. Brazil will be the 10th largest economy in 2023 and move up to the ninth place in 2024. Brazil is projected to consolidate its spot and will be $2.56 trillion economy by 2027. 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 2.8% in 2022 and 1% in 2023. In the recent quarters, the main drivers of growth have been household consumption, private investment and exports.

10. Islamic Republic of Iran

2021: 14

2022: 11

2027: 10

Iran entered the trillion-dollar club in 2021 and ranked as the 14th largest economy. With a projected GDP growth of 3% during 2022, Iran will inch up to the 11th spot with a GDP size of $1.97 trillion. 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 impose 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’s economy will become the 10th largest economy by 2025 and will continue to reign the position with a GDP of $2.43 trillion in 2027.

Rounding up

There will be 22 trillion-dollar economies in 2027, compared to 18 in 2022. The list of other trillion-dollar economies will include Italy, Russia, Korea, Australia, Spain, Mexico, Turkey, Netherlands, Saudi Arabia, Taiwan and Switzerland.

Disclaimer: The rankings are based on IMF data for Gross Domestic Product released in October 2022. Nominal GDP is mentioned as GDP is at current prices, U.S. dollars. 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.

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