Markets
The $86 Trillion World Economy in One Chart
Check out the latest 2023 update of the world economy in one chart.
The $86 Trillion World Economy in One Chart
Check out the latest 2023 update of the world economy by country GDPs in one chart.
The world economy is in a never-ending state of flux.
The fact is that billions of variables — both big and small — factor into any calculation of overall economic productivity, and these inputs are changing all of the time.
Buying this week’s groceries or filling up your car with gas may seem like a rounding error when we are talking about trillions of dollars, but every microeconomic decision or set of preferences can add up in aggregate.
And as consumer preferences, technology, trade relationships, interest rates, and currency valuations change — so does the final composition of the world’s $86 trillion economy.
Country GDPs, by Size
Today’s visualization comes to us from HowMuch.net, and it charts the most recent composition of the global economic landscape.
It should be noted that the diagram uses nominal GDP to measure economic output, which is different than using GDP adjusted for purchasing power parity (PPP). The data in the diagram and table below come from the World Bank’s latest update, published in July 2019.
The Top 15 Economies, by GDP
Rank | Country | GDP (Nominal, USD) | Share of World Total (%) |
---|---|---|---|
#1 | 🇺🇸 United States | $20.49 trillion | 23.89% |
#2 | 🇨🇳 China | $13.61 trillion | 15.86% |
#3 | 🇯🇵 Japan | $4.97 trillion | 5.79% |
#4 | 🇩🇪 Germany | $4.00 trillion | 4.66% |
#5 | 🇬🇧 United Kingdom | $2.83 trillion | 3.29% |
#6 | 🇫🇷 France | $2.78 trillion | 3.24% |
#7 | 🇮🇳 India | $2.73 trillion | 3.18% |
#8 | 🇮🇹 Italy | $2.07 trillion | 2.42% |
#9 | 🇧🇷 Brazil | $1.87 trillion | 2.18% |
#10 | 🇨🇦 Canada | $1.71 trillion | 1.99% |
#11 | 🇷🇺 Russian Federation | $1.66 trillion | 1.93% |
#12 | 🇰🇷 Korea, Rep. | $1.62 trillion | 1.89% |
#13 | 🇦🇺 Australia | $1.43 trillion | 1.67% |
#14 | 🇪🇸 Spain | $1.43 trillion | 1.66% |
#15 | 🇲🇽 Mexico | $1.22 trillion | 1.43% |
The above 15 economies represent a whopping 75% of total global GDP, which added up to $85.8 trillion in 2018 according to the World Bank.
Most interestingly, the gap between China and the United States is narrowing — and in nominal terms, China’s economy is now 66.4% the size.
A Higher Level Look
The World Bank also provides a regional breakdown of global GDP, which we helps to give additional perspective:
Rank | Geographic Region | GDP (Nominal, USD) | Global Share |
---|---|---|---|
#1 | East Asia & Pacific | $25.9 trillion | 30.2% |
#2 | Europe & Central Asia | $23.0 trillion | 26.8% |
#3 | North America | $22.2 trillion | 25.9% |
#4 | Latin America & Caribbean | $5.8 trillion | 6.8% |
#5 | Middle East & North Africa | $3.6 trillion | 4.2% |
#6 | South Asia | $3.5 trillion | 4.1% |
#7 | Sub-Saharan Africa | $1.7 trillion | 2.0% |
World Total | $85.8 trillion | 100.0% |
The organization breaks it down by income levels, as well:
Income Level | GDP (Nominal, USD) | Global Share |
---|---|---|
High income countries | $54.1 trillion | 63.1% |
Upper middle income countries | $24.4 trillion | 28.4% |
Lower middle income countries | $6.7 trillion | 7.8% |
Low income countries | $0.6 trillion | 0.7% |
World total | $85.8 trillion | 100.00% |
The low income countries — which have a combined population of about 705 million people — add up to only 0.6% of global GDP.
Looking Towards the Future
For more on the world economy and predictions on country GDPs on a forward-looking basis, we suggest looking at our animation on the Biggest Economies in 2030.
It is worth mentioning, however, that the animation uses GDP (PPP) calculations instead of the nominal ones above.
Markets
Beyond Big Names: The Case for Small- and Mid-Cap Stocks
Small- and mid-cap stocks have historically outperformed large caps. What are the opportunities and risks to consider?
Beyond Big Names: The Case for Small- and Mid-Cap Stocks
Over the last 35 years, small- and mid-cap stocks have outperformed large caps, making them an attractive choice for investors.
According to data from Yahoo Finance, from February 1989 to February 2024, large-cap stocks returned +1,664% versus +2,062% for small caps and +3,176% for mid caps. Â
This graphic, sponsored by New York Life Investments, explores their return potential along with the risks to consider.
Higher Historical Returns
If you made a $100 investment in baskets of small-, mid-, and large-cap stocks in February 1989, what would each grouping be worth today?
Small Caps | Mid Caps | Large Caps | |
---|---|---|---|
Starting value (February 1989) | $100 | $100 | $100 |
Ending value (February 2024) | $2,162 | $3,276 | $1,764 |
Source: Yahoo Finance (2024). Small caps, mid caps, and large caps are represented by the S&P 600, S&P 400, and S&P 500 respectively.
Mid caps delivered the strongest performance since 1989, generating 86% more than large caps.
This superior historical track record is likely the result of the unique position mid-cap companies find themselves in. Mid-cap firms have generally successfully navigated early stage growth and are typically well-funded relative to small caps. And yet they are more dynamic and nimble than large-cap companies, allowing them to respond quicker to the market cycle.
Small caps also outperformed over this timeframe. They earned 23% more than large caps.Â
Higher Volatility
However, higher historical returns of small- and mid-cap stocks came with increased risk. They both endured greater volatility than large caps.Â
Small Caps | Mid Caps | Large Caps | |
---|---|---|---|
Total Volatility | 18.9% | 17.4% | 14.8% |
Source: Yahoo Finance (2024). Small caps, mid caps, and large caps are represented by the S&P 600, S&P 400, and S&P 500 respectively.
Small-cap companies are typically earlier in their life cycle and tend to have thinner financial cushions to withstand periods of loss relative to large caps. As a result, they are usually the most volatile group followed by mid caps. Large-cap companies, as more mature and established players, exhibit the most stability in their stock prices.
Investing in small caps and mid caps requires a higher risk tolerance to withstand their price swings. For investors with longer time horizons who are capable of enduring higher risk, current market pricing strengthens the case for stocks of smaller companies.
Attractive Valuations
Large-cap stocks have historically high valuations, with their forward price-to-earnings ratio (P/E ratio) trading above their 10-year average, according to analysis conducted by FactSet.
Conversely, the forward P/E ratios of small- and mid-cap stocks seem to be presenting a compelling entry point.Â
Small Caps/Large Caps | Mid Caps/Large Caps | |
---|---|---|
Relative Forward P/E Ratios | 0.71 | 0.75 |
Discount | 29% | 25% |
Source: Yardeni Research (2024). Small caps, mid caps, and large caps are represented by the S&P 600, S&P 400, and S&P 500 respectively.
Looking at both groups’ relative forward P/E ratios (small-cap P/E ratio divided by large-cap P/E ratio, and mid-cap P/E ratio divided by large-cap P/E ratio), small and mid caps are trading at their steepest discounts versus large caps since the early 2000s.
Discovering Small- and Mid-Cap Stocks
Growth-oriented investors looking to add equity exposure could consider incorporating small and mid caps into their portfolios.
With superior historical returns and relatively attractive valuations, small- and mid-cap stocks present a compelling opportunity for investors capable of tolerating greater volatility.
Explore more insights from New York Life Investments
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