China’s usurping of the US as the world’s number one economy, which reports have suggested could happen by 2020, may occur even earlier according to a study from the world’s leading statistical agencies.
The 2011 International Comparison Programme (ICP), which involves the World Bank, assesses economies based on purchasing power parity (PPP), an estimate of the real living costs. On this basis, the study also finds that India has displaced Japan as the world’s third-largest economy since the previous update back in 2005, when India was ranked 10th.
According to the ICP research, China’s gross domestic product (GDP) stood at 87% of that of the US in 2011 and both the Chinese and Indian economies have more than doubled relative to that of the US. In the 2005 study, the ICP calculated that China’s economy was less than half the size of the US, at 43%.
“The US remained the world’s largest economy, but it was closely followed by China when measured using PPPs. India was now the world’s third largest economy, moving ahead of Japan,” the report said.
“The results indicate that only a small number of economies have the greatest shares of world GDP. However, the shares of large economies such as China and India have more than doubled relative to that of the US.”
The 2011 report ranks the world’s 10 biggest economies in descending order as the US, China, India, Japan, Germany, Russia, Brazil, France, the UK and Indonesia. The ICP noted that changes in its methodology and country coverage made comparisons with the previous results difficult.
A report in the
based on the ICP figures suggest that China could even overtake the US as the world’s largest economy later this year, rather than by 2020 as previously forecast.
The study was issued as data showed that the US economy barely grew in the first quarter of 2014, showing an annualised rate of just 0.1% and the weakest performance since Q412. A figure of around 1.2% had been penciled in, but wintry weather depressed US corporate spending and housing sector activity, while weak exports and smaller additions to inventories by businesses also restrained growth.
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