The World Economy

The world economy was pretty huge at the start of the Covid-19 pandemic. The aggregate global GDP was US$ 88 trillion according to howmuch.net.

US continued to lead at $21.43T, about 50% larger than the next biggest, China at $14.34T. China, which used to be neck and neck with India around 40 years ago, is now five times as large as India in annual GDP terms: China’s $15T versus India’s $3T. The US and China together account for 40% of the world GDP and 23% of the world population. India accounts for 3.3% of the world GDP and 17% of the world population.

howmuch.net notes that:

• The U.S. remains by far the largest economy in the world with a GDP of $21.43T or 24.42% of the entire globe.
• China’s economy grew from 2018 to 2019 to $14.34, but the country is still nowhere close to catching up to the U.S.
• The rest of the world’s economic powerhouses have comparatively much smaller economies, including Japan ($5.08T), Germany ($3.84T) and India ($2.88T).
• Our visualization doesn’t take into account the size of each country’s population.

My focus here is on India. India’s economy is estimated to have shrunk by 10% in 2020, thanks to the usual brain-dead economic policies of the Indian government; China’s economy expanded by 2%. In 2021, China’s GDP is expected to grow by 8% or so in 2021.

Well, the one constant in this world is change. The world’s biggest economies move in their rankings over time. According to satista.com, this is projected:

According to data from the IMF, Asian countries are expected to make up most of the top 5 countries in the world by size of GDP in 2024, relegating European economic powerhouses to lower ranks.

China’s and India’s economic growth has been steep since the 1990s, while Indonesia has even more recently entered the top 10 of the biggest economies in the world and is expected to reach ranks 5 by 2024. Japan, an established economy, is expected to cling on to rank 4 in 2024, while Russia will rise to rank 6.

Note that these rankings are on aggregate GDP and not on per capita GDP. In per capita GDP, the US will continue to lead China for decades, and India is likely to fall further behind China. The IMF estimates indicate that the US ranks 5th in per capita GDP, China ranks 73rd, and India ranks 125th. What I find most astounding is that Singapore — a country that could be described as a tiny, mosquito-infested swamp just a couple of generations ago — is ranked 2nd, and Ireland — which used to be dirt poor for most of its independent history since 1922 — has risen to the 5th rank, above Switzerland. The Celtic Tiger began its leap in 1995.

I find quoting statistics rather tedious and generally try to avoid them. Yet it is useful to have a passing familiarity with them so as to understand the trends. Of course, numbers are what you operate on when you do arithmetic. And remember that those who refuse to do arithmetic are doomed to speak nonsense. Innumeracy is as big a handicap as illiteracy.

That’s about it for now. Next week I begin an informal web-based course which I titled How the World Works – An Introduction. Email atanu@atanudey.com in case you’re interested.

Author: Atanu Dey

Economist. View all posts by Atanu Dey