Global Economics: The Top Five

Global Economics

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.

France

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

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.

Japan

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.

China

$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.

The Top 5 Economies In The World & How The Global Economy Is Expected To Change In The Future

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What is global economics? What are the top five economies in the world today? What were some of the issues that top economic powerhouses of today dealt with in the past? How is the global economy expected to change in the future? Will new emerging nations overtake the current top five economies in the world?

Global economics or the global economy refers to the economy of all the nations in the world. It takes into consideration things such as international trade, manufacturing, services, and government expenditure in each and every country in the world. Countries are ranked in the global economy according to their GDP or gross domestic product. What is GDP? GDP is the total value usually in dollars of the services and goods created in a country over the course of a specific period of time usually in the span of a year. GDP is usually measured in American dollars because the American dollar is one of the most stable currencies in the world. GDP is calculated by adding up the amount of consumer spending, investments, net exports, and government spending. If a country imports more than it exports, then net exports will be negative and will be subtracted from the country’s total GDP. If a country’s net exports are positive, meaning it exports more than it imports then it will be added to the GDP.

GDP or gross domestic product can be seen as a representation of the size of the economy of a nation. It can also indicate trends such as growth and decline of an economy. Understanding GDP is vital to understanding global economics. The top five economies as of 2014 listed in ascending order according to CNN money are:

1. United States with a GDP of about $17.5 billion
2. China with a GDP of about $10.0 billion
3. Japan with a GDP of about $4.8 billion
4. Germany with a GDP of about $3.9 billion
5. France with a GDP of about $2.9 billion

Japan’s economy has declined from $5.9 billion in 2011 to its current level of $4.9 billion in 2014. Japan also experienced a decline in 2005 and 2006. Yet despite these recent slowdowns in Japan’s economy Japan’s economy is expected to grow slowly but steadily in the coming years. Japan is still forecasted to remain a top five economy in the near future. Japan also overcame the lost decade which spanned from 1991-2000. During this time period wages actually declined and the country’s GDP actually shrunk. The lost decade was caused by a bubble that was fueled by banks lending money to people who were not able to pay back the loans.

Germany has thrived economically since West Germany and East Germany were reunified. Germany had to invest heavily it the less developed eastern part of the country and to change the command economy that was in place to a free enterprise economy. Despite a brief recession in Eastern Germany after reunification Germany is now one of the largest and strongest economies in the world. Germany, France and the UK are all expected to grow at a steady but slow rate with Germany leading this European group. The United Kingdom is expected to overtake France for fifth place in a couple of years.

The top two economies in the world, the United States and China are both expected to growing in the future. While China is still a long way off from overtaking the United States, many experts believe in the long term China can over take the USA and become the largest and most powerful economy in the world. The other largest and most powerful economies in the world today are Brazil, Italy, India and Russia. India and Brazil are fast growing economies that are expected to overtake Italy in a few years in GDP.