The 10 Largest Economies in the World

The United States is the undisputed heavyweight when it comes to the economies of the world.

America’s gross domestic product in 2022 was more than 40% greater than that of China, the world No. 2. Even more striking, U.S. GDP was over five times that of the next two largest economies, Japan and Germany.

Indeed, the strength of the U.S. economy following the advent of the COVID-19 pandemic has been a marvel to many economists and world economic experts.

They credit a robust labor market and the dynamic nature of the U.S. in creating new businesses and technologies, as well as massive fiscal and monetary stimulus during the pandemic for an impressive outcome in 2023. The U.S. economy grew by 2.5% last year.

In contrast, Japan saw its economy contract during the last quarter of 2023 due to weak domestic consumption. In the U.K., high interest rates and low productivity have been culprits in the country’s subpar economy.

“The big difference here is our job growth rate has exceeded the growth in the labor force for a couple of decades,” says Brad McMillan, chief investment officer at Commonwealth Financial Network. Although America’s population is aging and baby boomer retirements negatively affected the labor market during the pandemic, McMillan says the country still has more favorable demographics than its counterparts in Europe. Immigration also has boosted the U.S. labor market in the past year.

Maxime Darmet, senior economist for U.S. and France at Allianz Trade, says that since the pandemic, Europe has lost traction when compared with the U.S. This can be seen in the firm’s research on spending patterns: Consumers in the U.K. held onto their savings and Americans used their stored cash to keep spending, helping fuel economic growth.

Since the end of 2019, just before COVID-19 arrived in America, the U.S. economy has expanded by 8.2%, Darmet says, while the Eurozone has grown by 3.5% and Japan by 2.8%.

“The difference is fiscal policy,” he says, with the U.S. Congress putting stimulus money directly into the hands of consumers and European policymakers prioritizing infrastructure and other systematic investments that have been much slower to generate economic value.

Also, as the printer of the reserve currency for the world, the U.S. could borrow more money through the sale of government debt and run a bigger deficit as a percentage of its economy than countries in Europe.

“What we have seen in the U.K. and European countries is pretty similar – the growing divergence with the U.S. economy outperforming,” Darmet adds.