We are nearing the end of 2020, and it is time to look at the top economies of the year. Understanding of the global economic landscape is important for investing, as well as from a business expansion point of view. Ranking economies as per their GDP (gross domestic product) is the best way to find out the top economies. GDP is basically the total monetary value of the goods and services that a country produces in a specific time period. Detailed below are the top ten economies of 2020.
Top ten economies of 2020
The list of the top 10 economies in 2020 isn’t too surprising except for one or two names. In fact, the list has been more or less the same since 1980. As per IMF's World Economic Outlook Database, the top ten economies account for about 66% of the world's economy, while the top 20 economies make up about 80% of the world's economy. Following are the top economies of 2020 on the basis of nominal GDP:
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United States ($20.81 trillion)
The U.S. has retained the title of the largest economy of the world since 1981. There are several factors that contribute to the success of the U.S., such as an entrepreneurial environment, decentralized government, favorable regulatory environments, as well as advanced research universities. The country is number two in terms of the approximate value of natural resources, which was estimated to be $45 trillion in 2016.
- China ($14.86 trillion)
China was projected to surpass the U.S. to become the top economy in 2020, but such claims appear to be exaggerated. In fact, it may take China some more years to become the top economy. Nevertheless, China has shown remarkable growth in the past three decades and has benefitted immensely from its natural resources, including earth metals and coal. China witnessed an average growth of 9.52% between 1989 and 2019.
Japan ($4.91 trillion)
Japan’s economy is market-driven, which means the prices, businesses and production change as the per the consumer demand and not due to government’s action. Its electronic goods industry is the largest in the world, while its automobile industry is the third largest in the world. The country, however, faces big challenges ahead, such as a declining population and rising debt. As of 2017, Japan’s debt was 236% of its GDP.
Germany ($3.78 trillion)
Germany has developed a social market economy that is the strongest and biggest in Europe. The country is among the leading producers of cars, chemicals, household equipment and machinery. It makes up about 28% of the euro’s economy. Germany is number one in terms of entrepreneurship, which is the result of its skilled labor force, technological expertise and developed infrastructure.
United Kingdom ($2.64 trillion)
The UK lost its position to India last year, but it was able to reclaim it this year. The country ranks high in terms of Ease of Doing Business and Global Competitiveness. It was the first country to industrialize in the 18th century. The service sector of the country, especially the financial services industry, dominates the economy, accounting for about 80% of the GDP. London is regarded as the second biggest financial hub globally.
India ($2.59 trillion)
India adopted liberalization policies in the early 1990s, along with implementing measures like deregulating industries, privatizing the state-owned enterprises, and lowering control over investment and foreign trade. These measures helped India to boost its growth. In 1980, the Indian economy ranked 13th in terms of biggest economies.
France ($2.55 trillion)
France has a thriving tourism industry and it is the most visited destination in the world. The chemical and agriculture industry also plays a key role in the country’s growth. Also, foreign trade is a vital component of its economy, with imports and exports accounting for more than 60% of the GDP. It is the third-largest European economy after Germany and the UK.
Italy ($1.85 trillion)
It is among the most influential countries in Europe, and is a crucial member of the EU, the OECD, the G20, the G7 and the Eurozone. Italy’s economic growth is primarily driven by the consumer goods industry. Exports of services and goods account for about 30%, while imports are 27% of GDP. High unemployment and public debt continue to be a challenge for the country.
Canada ($1.6 trillion)
It is primarily a service-based economy, but has a strong manufacturing sector as well. About 70% of the country’s exports include merchandise exports. Canada has been a key member of the WTO (World Trade Organization) since 1995. The country is also rich in natural resources, and is seen as an energy superpower due to the abundance of natural resources such as petroleum and natural gas.
South Korea ($1.59 trillion)
It is a new entry in this list of top ten economies of 2020, overtaking Brazil. The country is popular for conglomerates such as Samsung and Hyundai. Its GDP per capita was among the lowest in the world during the 1960s, but now it is among the top exporters globally, thanks to international trade and industrialization.