Understanding the Economy
It is the measurement of production, consumption, distribution, and trade of goods and services of any country. It can be understood in a broad sense.
Culture + Values + Education + Technological Evolution + History + Social Organization + Political Structure + Legal Systems + Natural Resource Endowment + Ecology
= Economy of a Country
In the market-based economy, goods and services are produced and they are exchanged in the market according to demand and supply. The economy is not limited to the individuals but also the large entities such a government and corporations. The economy is governed by several factors such as culture, history, production, consumption, etc. That is why no two or three economies of a country are identical.
There are several notions associated with the economy, one such is Gross Domestic Product (GDP). By calculating the GDP we can measure the size of any country’s economy.
Understanding the Gross Domestic Product (GDP)
It is the total market value of goods and services produced with any country in a specific period. Although the GDP of a country is calculated on an annual basis these days it is also calculated every quarter. All countries have monetary to calculate their GDP quarterly.
GDP can be adjusted by the countries to control inflation.
Top 5 richest countries in the World, the list of top five countries by GDP. These counties do not dislodge from the position they hold. If we compare the list of 20 countries from 1980, 17 countries are always present with only 3 new entries each year.
United States ($21.428 Trillion)
The United States remains at the top position, in the year 2018 the size of the United States economy was $20.58 trillion and it is estimated that it will reach $22.32 trillion by the end of the year 2020. We all know the United States is the economic superpower because it has the advanced infrastructure, technology and is rich in natural resources.
⇒ United States Nominal GDP: $21.428 Trillion
⇒ United States GDP Purchasing Power Parity (PPP): $21.44 Trillion
⇒ United States GDP Per Capita: $62,794
⇒ United States GDP Growth Rate: 2.9% Annually
China ($14.14 Trillion)
It is no doubt that China is one of the fastest-growing economies, it grows exponentially over the past few decades. China becomes the exporting and manufacturing hub of the world. China is the world’s most populated country, having immense manpower. Soon it will become an economic power and surpass the United States.
The exponential growth can be seen from the below example
During 1980 China’s economy was $305 billion while the United States economy was $2.86 trillion. By this, you can easily predict how fast and exponentially the economy of China is growing. The Republic of China has a whopping 10% economic growth annually. Manufacturing and exports are the backbones of china’s economy
⇒ China Nominal GDP: $14.14 Trillion
⇒ China GDP Purchasing Power Parity (PPP): $27.31 Trillion
⇒ China GDP Per Capita: $9,770.85
⇒ China GDP Growth Rate: 6.6% Annually
Japan ($5.15 Trillion)
No doubt Japan is the third-largest economy in the world. In the year 2019, its GDP crossed the $5 trillion mark. Japan has seen several financial crises like the 2008 recession and when this country recovers from that situation then a massive earthquake occurs giving no time to retrieve its economy. It’s been always challenging for Japan to sustain its economical position. Currently, the economy of japan is muted but will not remain muted in the future for sure.
⇒ Japan Nominal GDP: $5.15 Trillion
⇒ Japan GDP Purchasing Power Parity (PPP): $5.75 Trillion
⇒ Japan GDP Per Capita: $39,289.96
⇒ Japan GDP Growth Rate: 0.8% Annually
Germany ($3.86 Trillion)
Germany is the only strongest economy in the European continent. It is the fourth-largest economy on a global scale. During the 1980’s Germany was the third-largest economy in the world with a GDP of $850.47 billion.
Germany is largely dependent on the capital’s goods and its export, its economy is continuously getting down after the 2008 financial crisis. But Germany leads the market in providing advanced manufacturing solutions.
⇒ Germany Nominal GDP: $3.86 Trillion
⇒ Germany GDP Purchasing Power Parity (PPP): $4.44 Trillion
⇒ Germany GDP Per Capita: $47,603.03
⇒ Germany GDP Growth Rate: 1.5% Annually
India ($2.94 Trillion)
India is the 5th largest economy in the world overtaking France and the United kingdom in 2019. India is now a part of a trillion-dollar economy.
Due to its large population, the GDP per capita is very low. In 1980 India was in 13th position with just $189.438 billion economies. The export and manufacturing industry has emerged very strongly. The Indian service sector is one of the world’s fastest-growing sectors and that contributes to almost 60% of the Indian GDP. As an agrarian country, agriculture is the backbone of the GDP but in recent years it’s contribution has declined to almost 17%.
The ruling party in his manifesto promises the entire nation that by the end of 2024 India will be a $5 trillion economy, but it seems to be false because for this India has to sustain 10% of economic growth annually.
⇒ India Nominal GDP: $2.94 Trillion
⇒ India GDP Purchasing Power Parity (PPP): $10.51 Trillion
⇒ India GDP Per Capita: $2,009.98
⇒ India GDP Growth Rate: 6.8% Annually
China can’t overtake the united states economy by 2020. But China’s economy is growing faster than the United States economy. Indian economy is growing faster than the economies of the countries in the top 10.
Due to the Corona outbreak and lockdown, the economies of major countries are going down. The United States and China sustain their economy by not imposing nationwide lockdown, but for India and several industries bearing burn due to the Covid-19 outbreak and they need financial help from the government as soon as possible.