Every year we see and hear report after report on how our economy is doing, but rarely do we see a comparison on how the top five countries are fairing along. Here we will take you through each of the top five economies of the world, and provide a brief description of how their economies are doing now and into the near future.
In U.S. dollars, France takes 5th place at $2.9 trillion. Per the OECD, France’s economy was stagnant the first half of 2014, but improved slightly during the summer months. GDP growth is expected to be slow, rising at just 0.4% during 2014. Budget deficit reduction through 2016 will be less than originally planned, with the 3% of GDP deficit not being reached until 2017 as opposed to the planned date of 2015.
Germany comes in 4th place at $3.9 trillion. Economic growth is weak in Germany, expected to come in at 0.2% during 2014. This is mainly due to weak activity in euro area trading partners and less demand growth in emerging economies. GDP growth is expected to gain strength through 2016 as a healthy job market and continued expansionary monetary policies help to boost private purchases and residential investments. The unemployment rate in Germany is expected to remain low, while price inflation will rise slightly.
In third place is Japan at $4.8 trillion. Japan’s output growth slowed down to ½ percent during 2014. This reflects the impact of the consumption tax hike; the weaker yen will help to sustain export growth, which will nudge inflation closer to the target of 2%. Because of the sharp output declines in the 2nd and 3rd quarters of 2014, the government has decided to postpone until 2017 the planned increase in the consumption tax rate.
$10 trillion puts China in 2nd place. Chinas economy looks like it will fall short of its government 2014 predictions with the loss of momentum during the first quarter of the year. The official growth target for 2014 is 7.5%, but economists are expecting that to come in at the more likely figure of 7.3%. This slowdown is expected to help reduce imbalances; job creation is still strong as the service sector continues to expand.
United States of America
At first place is the United States at $17.5 trillion. The economy is looking good, with the economy expected to grow steadily in the next few years through 2017. Continued increases in private employment will cause the unemployment rate to lower, although some pockets of the labor market will remain slow for a while to come. Industries such as healthcare will continue to grow at a rapid pace accounting for many new jobs. Monetary policies remain supportive; policy rates are not expected to start rising until mid 2015. The federal budget deficit has narrowed quite a bit, and for growth to continue the government will have to focus on spending associated with healthcare and old age pensions.