Last Updated on March 28, 2023
Are you looking out for the best economies in the world? A country is rated as the best economy using the international or World Economic Indicator (the macroeconomic indicator) which you’ll get to know as you proceed in your reading. The economy of a country is divided into three which are; the Extraction of raw materials, the manufacturing of goods from the raw materials they’ve gotten, and the services they provide or render to regions they export their goods.
In the world today, the top 10 countries are in the range of 66% of the world’s overall economy. Every country has a trade link where they import and export goods. So, most of the best economies in the world have strong trade with other competitor nations, which involves interaction between currencies, valuable commodities, and stock markets.
We’ll proceed to the 10 best economies in the world so that you can see reasons why they are rated as the top but then, we’ll look at how to measure a country’s economy.
Table of Contents
How is a country’s economy measured?
The macroeconomic indicators are used to measure a country’s economy the macroeconomic indicators. It is used to measure the country’s Economic growth, inflation rates, and exchange rates.
The following are macroeconomic indicators;
- Gross domestic product (GDP): this is the broadest and most used indicator of all economic and commercial activities.
- Unemployment rates: this is another indicator that reads the rate of unemployment. So the higher the rate of unemployment, the less demand there will be for goods and services.
- Consumer price index (CPI): this indicator is used to measure inflation in a country.
- Purchasing power parity (PPP): this indicator is used to measure prices in different countries so as to compare the purchasing power of each currency relative to one another.
Having known the macroeconomic indicators, we’ll therefore proceed to the 10 best economies in the world. This will interest you as you read further.
Top 10 Best Economies In The World
1. United States
The United States is the world’s top country with the strongest economy and has held this position since 1871, after the United Kingdom. Her currency which is the dollar (USD) is one of the strongest currencies in the world and the most popular currency to trade up to date.
The US is the world’s largest supplier of crude oil after Saudi Arabia in 2013. Some of the world’s largest oil markets stocks like Exxon Mobil, BP, and Chevron are based in the US as well as oil rigs are found within the Gulf of Mexico and neighboring countries, Texas and Louisiana. The US is also home to the largest blue-chip companies such as Amazon, Microsoft, coca-cola, visa, and Johnson & Johnson.
The US GDP is $22.66 trillion with a PPP of $22.68 trillion.
2. China
China is the world’s largest manufacturing economy and exporter of goods, as well as the largest country for international trade. There is just a little gap between the US and China’s GDP making china to be the top most in the time to come.
China’s tech industry has become popular with traders in different parts of the world. China is also home to some of the largest blue chip companies in the world which are; Alibaba, JD.com, and Baidu. Moreso, China is also a major contributor to the 5G industry, as well as gaming, streaming services, and mobile phone development. This is interesting to know.
It will amaze you that China has the world’s largest agricultural economy that accounts for around 10% of the country’s GDP, in comparison with other developed countries like the UK and the US. This makes China the largest in terms of global exporting.
China’s GDP is $16.64 trillion with a PPP of $26.66 trillion
3. Japan
It will amaze you to know that Japan has one of the lowest unemployment rates in the world of just 2.3%.
The Japanese yen (JPY) is one of the most traded currencies. JPY has an inverse correlation with the Nikkei 225 index, meaning that when stocks are performing well, the yen appears weaker, prompting traders to invest in the safe haven JPY when their stock portfolio is under threat.
Japan has the most notable brands in the automobile industry, such as Mitsubishi, Toyota, Honda, Suzuki, and Nissan contributing to a large proportion of profits. Japan’s equivalent of the Dow Jones 30 is the Nikkei 225 stock index, which represents a benchmark of blue chip companies within the Japanese economy. These are all listed on the Tokyo Stock Exchange, as well as being available internationally. The index features a number of stocks from different sectors, including technology, transportation, consumer goods, and finance.
Japan’s GDP is $5.38 trillion with a PPP of $5.59 trillion.
4. Germany
Next on the list is Germany, Europe’s largest economy. This country has different sectors represented within the German stock market which is the DAX 30. It is equivalent to Dow Jones 30 stock index, holding 30 blue-chip stocks on the Frankfurt Stock Exchange, which is the 10th largest stock exchange in the world by market capitalization. Adidas, BMW, Deutsche Bank, Merck, and SAP are companies that make up the DAX 30.
German’s treasury market contributes to Germany’s economy as one of the largest economies in the world. Its debt securities and government bonds have maturities of around 10 to 30 years and are considered medium-term and long-term bonds. Germany’s bond index reflects US treasury bonds. These include the long-term Euro Bund, medium-term Euro Bobl, and short-term Euro Schatz bonds.
Germany’sGDP is $4.32trillion with PPP of $4.74trillion
5. United Kingdom
Nominal GDP: $3.12 trillion
GDP (PPP): $3.17 trillion
The United Kingdom is next on the list and has its own important role in the world’s economy. It is the world’s second-largest financial center after New York. This sector contributes to around 80% of the overall GDP. The UK’s central bank is the Bank of England, which is responsible for setting interest rates and keeping a stable cost of living across the nation.
United kingdom takes the lead in the aerospace industry and has helped to develop many popular aircraft models in collaboration with foreign manufacturers, such as Boeing and Airbus. In the pharmaceutical industry, the UK is also very prominent and has contributed towards research and development, retail, prescription drugs, and vaccine development during times of medical emergency. Some top pharma stocks in the UK right now are GlaxoSmithKline (GSK) and AstraZeneca.
The UK’s GDP is $3.12 trillion with a PPP of $3.17 trillion.
6. India
How amazing that India is actually third in terms of PPP rankings. India has the fastest-growing economy in the world and has increased its size by seven times since 2000. This country contributes to the world’s economy in terms of textiles production, natural resources, coal, cement, and automobiles, and it is a huge exporter of crude oil and natural gas.
Actually, as a developing market economy, because it depends on supply and demand from other countries but then, India is one of the largest suppliers in the world of commodities where the majority of the population work in agricultural and food products such as milk, fruits, vegetables, seafood, rice, wheat, cattle, substance, and cotton.
India’s GDP is $ 3.05 trillion with a PPP of $ 10.21 trillion.
7. France
France has one of the highest standards of living and it’s the most visited tourist destination in the world. France relies heavily on tourist income for its exploding economy, but it also is a world leader in the chemical, pharmaceutical, and automobile industries. It will amaze you that every year, over 95 million tourists visit France for tourism because of its culture and standard of living. Sanofi is the world’s fifth-largest pharmaceutical company, Groupe PSA is the world’s sixth-largest car manufacturer and Total is one of the seven major oil companies in the world.
One of the things that France is known for is the production of high-quality products like cheese, wine, dairy products, poultry, and wheat which are the main exports.
France’s GDP is $2.94 trillion with a PPP of $3.23 trillion.
8. Italy
Italy is divided into two regions of its economy which are the north and south regions of the country. The north region contributes more to Italy’s economy than the south region because the south is less developed with a high level of poverty leading to a high rate of unemployment rate. As of 2008, the unemployment rate was at 12.7% but however, but some figures have dropped to an average of 9.9% in 2019.
Nonetheless, Italy is the largest hub for luxury goods in Europe and the third worldwide. Their manufacturing sector comprises of many small and medium-cap companies within the “industrial triangle” of Italy which includes; Milan, Turin, and Genoa. The northern regions of Italy focus on automotive, aerospace, and other technical industries, whereas the southern regions focus on the production of textiles, tools, and commodities.
Italy’s GDP is $2.11 trillion with a PPP of $2.61 trillion.
9. Canada
Canada is one of the best economies in the world, famous for its mining of precious metals, and is home to some of the largest gold production companies in the world. Goldcorp was once the largest gold supplier in the world, before it merged with US-owned Newmont Corporation in 2019, leading to a rebrand of Newmont Goldcorp Corporation.
In terms of employment, Canada has one of the best rates worldwide, with an average of 5% unemployment rate.
Canada’s GDP is $1.88 trillion with a PPP of $1.98 trillion.
10. South Korea
South Korea is the tenth-best economy in the world today. The country has experienced rapid economic development over the years after it took over from Brazil in 2021 due to its strong education system and technology. In particular, South Korea has one of the strongest telecommunications companies known Samsung which is the largest mobile phone provider in the world, with more than 20% of the market share. Other notable stocks include automotive companies Hyundai and Kia, steel manufacturer POSCO, and holding companies SK Group and CJ Group.
Also, South Korea is one of the world’s largest exporters of electronics, steel, and automobiles, and its economy relies heavily on trade with its main business partners which are; China, the US, Vietnam, Hong Kong, and Japan. In addition, South Korea is well-known for its dominance of family-owned companies that are all traded on the Korean Stock Exchange for foreign investors.
South Korea’s GDP is $1.81 trillion with a PPP of $2.44 trillion.
These countries have amazing economic performances which play important roles in the world’s economy rating them as the top 10 best economies in the world.