Gross Domestic Product (GDP): definition and rankings

Gross Domestic Product (GDP):  definition and rankings

The gross domestic product (GDP) is one of the primary indicators of a country’s economic performance. It is calculated by either adding up everyone’s income during the period or by adding the value of all final goods and services produced in the country during the year. Nominal GDP is the gross domestic product evaluated at current market prices. Nominal differs from real GDP in that it includes changes in prices due to inflation or a rise in the overall price level. Per capita GDP expressed in Purchasing Power Parity (PPP) is used as an indicator of standard of living as well, with higher per capita GDP being interpreted as having a higher standard of living.

IORMA has prepared a ranking of countries, which is based on the data taken from the IMF World Economic Outlook April 2016 for the year 2015.

Top ten  countries in nominal terms in that year were: 1) United States, 2) China, 3) Japan, 4) Germany, 5) United Kingdom, 6) France, 7) India, 8) Italy, 9) Brazil and 10) Canada.

In PPP terms, the top ten countries were : 1) China, 2) United States, 3) India, 4) Japan, 5) Germany, 6) Russia, 7) Brazil, 8) Indonesia, 9) United Kingdom, and 10) France.

Experts forecast that by 2030 the top ten in nominal terms will still be led by the US, closely followed by China. In third place will be India, followed by Japan, Germany, Brazil, UK, France, Canada and Russia.

In PPP terms China will be leading in 2030, followed by the US, India, Japan, Indonesia, Brazil, Russia, Germany, Mexico and the UK. By 2050 is is expected that Nigeria as the first African country will enter the top ten to the detriment of the UK which country will fall back to the eleventh place by then.

The share of the top ten countries in total world GDP in 2015 is around two-thirds in nominal terms and just over 60% in PPP terms. Forecast is that this share will remain roughly the same by 2020.

The following chart shows the top ten countries in PPP terms in 1980, 2015 and the forecast for 2050 (in billion international dollars).