What Powers the 10 Top Economies in the World?

When we talk about certain economies being the strongest in the world, we normally mean that their GDPs (gross domestic products) are the largest. A nation with a healthy GDP is one that produces goods and services that amount to a high value, and this is usually manifested in an elevated standard of living enjoyed by its citizens.

An exception to this rule would be China, whose economy was actually the biggest in the world as of April 2022, but whose residents do not enjoy proportionally high standards of living. The level of these standards can be measured using a tool called GDP per capita, which, as of 2020, was only $16,400, as compared with America’s figure of $63,414 for 2021. Some people argue that gauges of economic power should take account of a nation’s ability to provide for its people, which would relegate China to a much lower place on the list of strongest economies.

Just focusing on GDP per capita is also questionable, though, because countries like Qatar and Ireland boast higher figures in this category than the USA, yet we normally wouldn’t classify them among the top ten economic titans on the globe. The reason for this would be their relatively minor role in powering the world economy. Some thinkers want to include things like life expectancy, recreation time, quality of life, and financial security as gauges of economic power. For our purposes, we’ll stick to pure GDP as a measure of the world’s strongest nations, since our aim is merely to show the sources of their financial clout. We, therefore, find ourselves with the job of working through the following list:

10 Strongest Economies on the Globe in 2024:

●       USA

●       China

●       Japan

●       Germany

●       UK

●       India

●       France

●       Italy

●       Canada

●       South Korea

Knowing what’s behind their wealth is valuable because it bears an influence on which nations are positioned to thrive in 2024 and beyond after what was, in many respects, a very challenging year, whose headwinds haven’t yet disappeared. The data indicate that GDP growth in 2023 for many countries was actually quite impressive, considering that we’re still trying to recover from the impact of the pandemic. But many strategists foresee an economic slowdown on the horizon, especially after the US Federal Reserve hiked interest rates as much as seven times last year, and continued on their path into the new year.

Join us now for our explanation of what keeps the world’s 10 most imposing economic machines chugging along, heading up from smallest to biggest.

10. South Korea

South Korea emerged from the devastation of the Korean War (1950-1953) with its economy teetering on the brink of collapse and its infrastructure largely demolished. They then demonstrated what quick and effective development can do for a nation, industrializing and growing at a rapid pace and eventually taking their place as one of the top economies in the world. Since 1998, their agricultural sector has contributed less than 5% to GDP, and, by 2024, one-quarter of their labor force was employed in the industrial sector. They’ve made themselves into a major hub for the electronics, chemical, and shipbuilding industries. Samsung Electronics Co., Hynix semiconductor company, Hyundai, and Kia are some of the big names in electronics and automobiles that call South Korea home. One of the nation’s weak points is their considerable reliance on imported food from countries like the USA, China, and Australia.

9. Canada

Rich in natural resources, Canada benefits from its deposits of gold, silver, and nickel, but mostly from its natural supply of gas and oil. The economy is nourished by mining, and also by a robust real estate sector that includes services like renting and buying, appraisal, and management. Canada also manufacturers heavy machinery, chemicals, and food, and hosts a formidable financial sector too. It is through trade with the US, UK, and China that the country has grown into one of the largest economies in the world. Import and exports, respectively, each make up a hefty one-third of their GDP.

8. Italy

Italy’s exports really got a boost about twenty years ago, when the European Union (EU) grew and the new euro currency was relatively cheap. The most loyal customers for Italian products are France, Germany, Spain, and the UK, and their most popular goods include textiles, foods, and manufactured products. In terms of olive oil production, Italy has no equal, and it also sends out lots of tomatoes and wine. Their geographical positioning gives them an advantage in trade with lots of locations, including North Africa, Eastern Europe, and the Middle East. One thing Italy struggles with is its poorness in energy reserves, which forces them to import over four-fifths of their power needs. Another thing is the relatively underdeveloped southern side of the country, which still has a lot of catching up to do.

7. France

France’s big economic engines are its pharmaceutical, manufacturing, and tourism industries. The country has been battling, however, with stubbornly high unemployment since the 2008 financial crisis, which hinders their productivity. President Macron is planning to remedy the situation by paying out 15 billion euros for vocational training by 2026. France also needs to improve the level of their skilled labor in manufacturing. The Corona virus hampered their economy quite significantly, but Macron has made the country more hospitable to businesses than it once was. 

6. India

India’s agricultural prowess used to provide Great Britain with their prized tea and cotton, but the economy has grown much more diversified in recent years. Their services sector, which covers IT, software, and telecommunications, churned out 55% of the nation’s GDP in 2018. Their agricultural sector is still strong, though, accounting for 18.32% of GDP in 2020, and bringing the rest of the world lots of good lemons, mangoes, and bananas. One big challenge in this area has to do with irrigation, because monsoons are still widely relied upon to provide this service. India’s poor storage facilities also lead to a huge amount of food wastage. Big contributors to GDP at the moment include automobiles, pharmaceuticals, and petrochemicals, and India’s economy continues to grow rapidly.

5. UK

Speaking of Great Britain, it’s been estimated that their decision to leave the EU, known as Brexit, has been costing them 145 million pounds a week since September 2018. One reason is the reduced flow of foreign funds into the country, and another is their restricted connections with foreign markets. Results include elevated inflation, a declining exchange rate, and low income for UK residents. All these have held back economic growth in recent years. Still, the UK benefits from a diversified economy that’s powered by services like food and beverage, retail, and finance, on the one hand, but also manufacturing and construction, on the other. Don’t forget tourists because they spent about $35.9 billion on their visits the country in 2019.

4. Germany

Germany enjoys being part of the EU and using the euro because interest rates are kept low and inflows of foreign funds are held high. They are very competitive exporters to eurozone countries because they manage to send shipments at low cost. Major German companies include such names as Siemens, BASF, and Volkswagen. Their manufacturing industry, which encapsulates not only automobiles, but also chemical and mechanical engineering companies, brings in a considerable 25% of GDP. Many analysts agree that Chancellor Angela Merkel improved the scenarios for both economic growth and employment quite significantly.

3. Japan

Because Japan is a big exporter of machine and automobile parts, the green trend towards EVs (electric vehicles) could deal a blow to their economy. EVs only use two-thirds of the parts that petrol-powered vehicles use. The relatively cheap Japanese yen has helped out their automobile industry, though, and pushed Toyota into top position among global carmakers in 2007. On the negative side, Japan leans too heavily on its central bank to make growth possible. The Bank of Japan keeps on buying government debt to hold interest rates super-low. This results in the general expectation among its citizens that rates should remain low, together with prices. When prices go up, people tend to cut back on buying until they drop again.

2. China

China was not, by any means, a wealthy nation following the destruction of World War Two, but, when they opened up their economy in 1979 by establishing better relations with the USA, things really started to change. Their exports took off, which nourished their manufacturing sector and fueled urbanization. Since that year, they’ve enjoyed average annual growth of about 10%. Half the world’s steel comes from China, and their mines unearth a variety of things including coal, oil, natural gas, and gold. There’s also high growth potential in their pharmaceuticals industry. In terms of headwinds, China suffers from unusually high levels of official corruption, which can get in the way of foreign fund flows. 

1. USA

Like its northern neighbor, America is blessed with lots of natural resources including fertile land, fresh water, oil, and natural gas. Its economic pre-eminence has to do with the unity among its states in terms of culture, political structure, money, and language. This streamlines its monetary system more than, say, the EU’s. Aside from that, both of its neighboring nations are friends, so there’s no need to devote resources to guarding its borders. These amiable relations also bring economic benefits to the USA in the form of the North American Free Trade Agreement. Finally, America’s currency is the world’s reserve currency, which cements their status the premier economic power on the globe.

Conclusion

The world's top economies are determined based on their GDP, which is a measure of the total value of goods and services produced within a country's borders. However, this metric alone does not necessarily reflect the level of economic prosperity enjoyed by a nation's citizens. While some countries like South Korea and Canada rely on natural resources and trade to fuel their economies, others like Italy and France depend on industries such as manufacturing and tourism.

Meanwhile, India's economy has diversified in recent years to include a strong services sector, while China's position as the world's largest economy has been accompanied by debates around the country's ability to provide for its citizens. With the global economy still recovering from the impact of the pandemic and facing headwinds such as rising interest rates, understanding what powers these top economies is crucial for analyzing their future.