Asia accounted for more than 9.2% of the world's oil production in 2014. The region was led by China and India, the world's fourth and 20th biggest oil-producing nations, respectively. In recent years, Asia's share of world oil production has been on a slow but regular decline. This is primarily a consequence of flat regional oil production during a period of rising overall global output.
In the five years from 2010 to 2014, Asian oil output rose slightly from about 8.5 million barrels per day in 2010 to just over 8.6 million barrels per day in 2014. During the same period, world oil production grew more than 5%, from about 88.1 million barrels per day to about 93.1 million barrels per day. While a number of countries in the region have discovered large new reserves, others face declining production from aging oil fields. Consequently, analysts expect recent production trends to continue for the region as a whole.
1. China
China is the biggest oil producer in the region by a substantial margin, accounting for nearly 4.6 million barrels of oil per day in 2014. It is responsible for nearly 53% of Asia's total production. According to the U.S. Energy Information Administration (EIA), Chinese oil production has grown every year since 1981 without exception. In the most recent five-year period from 2010 to 2014, production grew a total of about 4.6%.
The oil industry in China is led by several of the largest energy companies in the world: China Petroleum and Chemical Corporation, known as Sinopec; China National Offshore Oil Corporation, or CNOOC; and China National Petroleum Corporation, or CNPC. In 2014, these three companies combined to produce a total of over 1.4 billion barrels of oil in China, more than 85% of the country's total annual production. In the same year, the companies combined to produce an additional 630 million barrels of oil in dozens of countries around the world.
2. India
India accounted for production of about 978,000 barrels of oil per day in 2014, the fifth year in a row daily production neared but did not clear the 1 million barrel mark. While production growth has essentially flatlined in recent years, oil consumption in India continues to grow by leaps and bounds. National oil consumption reached nearly 3.7 million barrels per day in 2013, the most recent year for which data is available. In the five years from 2009 to 2013, Indian oil consumption grew a total of more than 19.3%, far outpacing domestic production. As of 2013, India is the fourth largest oil importer in the world.
Oil production in India is dominated by the state-owned enterprise, Oil and Natural Gas Corporation, which accounted for roughly 60% of domestic production in 2013. An additional 27% of Indian oil is produced by Cairn India Limited, the Indian subsidiary of the British oil and gas company, Cairn Energy PLC.
3. Indonesia
Indonesia comes in just behind India with production of about 911,000 barrels per day in 2014. In the 1990s, when production was at a high, Indonesia produced between 1.5 million and 1.7 million barrels per day. Since that period, however, production has followed a nearly unbroken downward trend to the current level. In 2009, the combination of declining production in aging oil fields and rising domestic demand led Indonesia to exit Organization of the Petroleum Exporting Countries (OPEC), of which it had been a member since 1962.
PT Chevron Pacific Indonesia, a subsidiary of the American energy giant Chevron Corporation, is Indonesia's biggest oil producer, accounting for about 40% of production in 2014. Indonesia's state-owned energy company, PT Pertamina, was responsible for an additional 26% of the country's production. Foreign oil companies including Total SA, ConocoPhillips Co. and CNOOC are also significant producers.
4. Malaysia
Malaysia produced about 697,000 barrels of oil per day in 2014, most of which was extracted from offshore fields. Over the course of more than two decades since 1991, production in the country fluctuated between 650,000 and 850,000 barrels per day. According to the U.S. EIA, recent downward production trends can be attributed largely to declining output on aging oil fields. The Malaysian government is responding by encouraging investment in recovery technology and new field development.
Petroliam Nasional Berhad, also known as Petronas, is Malaysia's state-owned energy corporation. It controls all oil and gas resources in the country and is responsible for development of those assets. International integrated oil and gas companies, such as Exxon Mobil Corporation, Murphy Oil Corporation and Royal Dutch Shell plc, are involved with Petronas in oil production activities in Malaysia, including partnerships in enhanced oil recovery projects on aging oil fields.
5. Thailand
Oil production in Thailand has trended upward in recent years, rising from about 390,000 barrels per day in 2010 to nearly 502,000 barrels per day in 2014. This performance continues a nearly unbroken growth trend that began in 1980 when the country produced only 1,300 barrels per day. Despite this growth, Thailand must import large quantities of oil to meet its domestic demand. In 2013, Thailand consumed nearly 1.2 million barrels of oil per day, requiring net oil imports on the order of 700,000 per day to meet demand.
Chevron is the biggest oil producer in Thailand. It operates Thailand's largest oil field, Benjamas, and has investments in many other important production sites in the country. Thailand's state-owned oil company, PTT Exploration and Production, is the country's second-largest oil producer. Other international companies involved in oil production in Thailand include Coastal Energy Company and Salamander Energy plc.
6. Vietnam
Vietnam has maintained oil production volumes between 300,000 and 400,000 barrels per day since 2000. Its daily production in 2014 amounted to about 316,000 barrels. In 2011, offshore exploration and drilling activities raised Vietnam's proven oil reserves from 600 million barrels to 4.4 billion barrels, rocketing it into third place in Asia after China and India. Industry analysts expect further discoveries as exploration of Vietnam's offshore waters continues.
Vietnam's state-owned oil and gas company, PetroVietnam Gas Joint Stock Corporation, is involved in all oil production in Vietnam via its production subsidiary, PetroVietnam Exploration Production Corporation, and its joint ventures with international oil companies. Chevron, Exxon Mobil and the Russian company, Zarubezhneft OAO, are several of the largest international producers operating in Vietnam.
The World Bank reports that growth in South Asia has increased from 6.2% to 7.5% between 2013 and 2016. During the same period, the growth rate of developed economies remained stagnant at lower rates in the range of 1% to 3%, and those of other developing nations (like BRICs, except for India) remained flat or even turned negative. Amid sluggish global growth, the South Asian region has emerged with consistent and strong performance.
This article explores the economic potential of the economies in South Asia, and what makes each of these nations have the next high-growth potential.
South Asia: Less Vulnerable to Global Financial Turmoil
The South Asian region primarily comprises India, Pakistan, Bangladesh and Sri Lanka, as well as smaller nations, like Nepal, Bhutan and Maldives.
While many of these economies have a considerable share of revenues from international exports, domestic demand is expected to be the primary driver for growth in near future. Domestic markets make these economies less prone to external vulnerabilities and global financial turmoil.
Almost all of these nations are net importers of commodities. Thus, while many energy-hungry nations such as India have efficiently used the recent low cost of oil to stockpile huge inventories of oil for future use, rising energy prices present long-term downside risks. Nations like Bangladesh have emerged as major exporters of textile products and have benefited from lower prices of cotton.
At the same time, as most South Asian countries are not huge importers of finished goods: many are involved in importing raw commodities to manufacture finished goods for export. This dampens the prospective effects of trade protectionism. At the same time, cheaper imports have allowed manufacturing of finished products at lower costs, offering competitive advantage for international exports.
Cheaper commodities also assisted these economies with declining inflation, enabling governments to focus on infrastructure development and move ahead with much-needed economic reforms.
The region generally has stable governments that have introduced supportive policies to facilitate international investments and helped improve investor sentiment.
With increased capital inflows, the current account deficit of the majority of South Asian nations has reduced. Though the currencies have declined against the U.S. dollar, the decline served beneficially to generate more revenues from exports. The same assisted in building high forex reserves, as South Asia received high inflows of remittances.
Future Projections
While the South Asian economies showed strong GDP growth from 6.2% in 2013 to 7.5% between 2013 and 2016, the World Bank estimates that momentum will subside in coming years before regaining in 2019.
Country-Specific Accounts
India, the bellwether of the group, has successfully diversified its manufactured product base and enhanced its production capabilities. It progresses with one of the highest growth rates, and could fare even much better. Recently, India has managed to attract foreign investments, liberalized FDI in key sectors like defense, real estate, railways and insurance, and progressed towards energy efficiency. However, the hurdles in implementing key reforms, including a goods and services tax (GST) and land acquisition bill, continue to pose impediments.
An aggressive cut in subsidies has released funds for development needs, and an increase in ventures under public-private partnerships is also aiding the growth momentum.
The well-formulated “Make In India” campaign has started supporting local manufacturers, and attracted multinational corporations and even nations to set up manufacturing facilities in India across different industry and services sectors. A study by UK think tank the Centre for Economics Business and Research (CEBR) suggests that “India could become the world's third largest economy after 2030,” and together with Brazil it could lead to "France and Italy kicked out of the exclusive G8 group” in the next 15 years. (For more, see India: A Bright Spot in Today's Global Investment Landscape.)
Pakistan continues to benefit from increased investments from China, and the return of Iran to international markets is expected to boost mutual trade. Additionally, the China-Pakistan Economic Corridor (CPEC) is expected to bolster the Pakistani economy through to 2030. According to Dawn news, “The CPEC is a 3,000-km network of roads, railways and oil and gas pipelines from Gwadar port (in Pakistan) to Kashgar city in north-western China’s Xinjiang Uygur autonomous region.”
Bangladesh has emerged as a leading manufacturer of textile products. The forecast of increase in domestic demand, hike in public sector wages, and increased construction activity will bolster its economy in near term.
The smaller economies of Bhutan and Sri Lanka too have strong growth projections. Bolstered by increasing foreign investments, Bhutan has embarked on building three major hydropower projects to boost its industries and revenues, while Sri Lanka is going for policy reforms to boost its service sector growth. Both these nations are also expected to benefit from high growth in the tourism sector, which has so far remained untapped in its true potential.
While the majority of the global FDI investments are made in India, other South Asian nations are gaining their share. For instance, China has increased its energy supplies in Nepal, port and logistics construction in Sri Lanka, and infrastructure and production in Pakistan.
The risk profile for most South Asian nations is assessed to be low, as they are commodity importing and their growth is forecasted to be driven by domestic demand. Risk primarily remains dependent on domestic factors and can be mitigated at the individual level in a timely manner. For instance, India faces delays in implementing reforms, Maldives has been running into challenges due to political problems, Nepal continues to recoup the losses due to last year’s earthquake and recent political transition by introducing a new constitution, while Pakistan continues to battle on the security front.
The Untapped Intra-region Potential
Though the large nations in the region, India and Pakistan, have successfully managed to increase their trade share with East Asian and Sub-Saharan African nations in recent times, a lot of potential with other developing nations across the globe still remains untapped for the entire region. The region as a whole has remained closed to the rest of the world due to lack of economic integration.
These countries have limited business integration with each other, for various political and historical reasons. The World Bank reports that “On average, India, Pakistan, Sri Lanka and Bangladesh’s exports to each other amount to less than 2 percent of total exports.”
For instance, after Mexico-U.S. and Russia-Ukraine, the Bangladesh-India corridor ranks third in the list of top migration corridors, which accounts for $4.6 billion remittances in 2015 between the two nations. If the existing trade barriers are eliminated facilitating regulated trade flow, the untapped potential can do wonders for this region.
The Bottom Line
With a projected growth rate of 6.2%, the South Asian region has all it takes to be the next bright spot in the global economy. Though challenges remain due to political uncertainty, bureaucratic red tape and security concerns, the potential can increase manifolds if the nations forego their historical and geopolitical differences and present a collective front to emerge as an integrated economic powerhouse.
By the year 2020, a great shift will have occurred in the worldwide balance of economic power. Analysts predict emerging market economies will become some of the most important economic forces, and China will take the top spot in the list of the world’s largest economies by gross domestic product (GDP), both outright and measured in terms of purchasing power parity.
The Current Top Economies of the World
As of 2015, some of the largest economies in the world include the United States, China, Japan, Germany, the United Kingdom, France, India, Brazil, Italy and Russia. Most of the economies in this top 10 list are developed countries in the western world, while China, India, Russia and Brazil are emerging market economies.
The Top Economies of 2020
The rising importance of emerging market economies in 2020 will have broad implications for the world’s allocation of consumption, investments and environmental resources. Vast consumer markets in the primary emerging market economies will provide domestic and international businesses with many opportunities. Although income per capita will remain the highest in the world's developed economies, the growth rate in per capita income will be much higher in major emerging market nations such as China and India.
According to anticipated GDP in terms of PPP, in 2020 the top economies will be China, the U.S., India, Japan, Russia, Germany, Brazil, the U.K., France and Mexico. One of the major reasons for the growth of emerging economies is that advanced economies are mature markets that are slowing. Since the 1990s, the economies of advanced countries have experienced far slower growth in comparison to the rapid growth of emerging economies such as India and China. The worldwide financial crisis from 2008 to 2009 fueled the trend of decline among the advanced economies.
For example, in 2000 the U.S., the number one economy in the world, accounted for 24% of the world's total GDP. This declined to just over 20% in 2010. The financial crisis and a faster-paced growth by emerging economies were key factors in the decline of the U.S. economy in relation to China. In the mid-2000s, Japan’s economy saw a slight recovery after a lengthy period of inactivity that was due, at least in part, to inefficient investments and to the burst of the asset price bubbles. The global economic downturn has had a significant impact on the country because of prolonged deflation and the country’s heavy dependence on trade.
The economies of countries in the European Union, which include France, Italy and Germany, account for just over 20% of the world’s total GDP. This is a relatively large decrease from the year 2000, when these countries collectively held over 25% of the world’s GDP. The increase in average population age and rising unemployment rates is contributing to this slowdown.
Before the Brexit vote in late June, the International Monetary Fund (IMF) issued a report warning the UK of the economical consequences of leaving the EU. The IMF estimated that the negative effect on GDP following a leave-vote could be anywhere between 1-9.5%. The UK voted to leave and until trade agreements have been made, it will be difficult to accurately estimate an impact on the GDP.
Brexit aside, the IMF predicts advanced economies will experience a growth of less than 3% in 2020. Advanced economies are also facing challenges in terms of public debt reduction and government budget deficits. The IMF also forecasts that growth of Asian economies will be significantly higher, at approximately 9.5%. As of 2015, the growth of these Asian economies is one of the factors driving the worldwide economic recovery.
The Advancing of Emerging Countries
Emerging economies are catching up with the progress of the advanced world and are predicted to overtake many of them by 2020. This will cause a substantial shift in the balance of economic power around the world. China’s share of the world’s total GDP increased more than 6% from 2000 to 2010. Analysts and the IMF anticipate China taking over the lead position as the world’s largest economy, and posit China may overthrow the U.S. as early as 2017. By some calculations, China is already ranked as the largest economy in the world.
As of 2015, India has the 10th largest economy in the world. Many analysts foresee India surging in growth and taking over Japan’s place as the third largest economy in the world by 2020. Some believe India may grow even faster and push the U.S. into third place. Analysts point out India’s young and faster-growing population as key factors in the rate of growth for this country’s economy.
Russian and Brazilian growth potential is great, as both countries are two of the world’s largest exporters of natural resources and energy. However, in the future, the lack of economic diversification in Russia may be likely to cause the country some difficulty with continued growth.
Analysts also expect that by 2020, Mexico will have the 10th largest economy by GDP measured at PPP terms. The country’s proximity to the U.S., growing business and trade deals with the U.S. and a growing population will aid its economic development.
Implications of the Economic Shift
As household incomes rise and populations expand, the service and consumer goods markets will present exponential opportunities in emerging markets. More specifically, luxury goods will have opportunities in these markets as more families reach the middle class.
One of the biggest implications is the importance placed on younger consumers. Though in some emerging countries, including China, the population is aging, the population of emerging markets is overall significantly younger than those of people in advanced economies. Young consumers also represent substantial power over purchases, particularly large items such as cars and homes, as well as the items needed to furnish homes.
Emerging countries are likely to become important foreign investors. The foreign investments they are responsible for making only serve to enhance their influence in the global economy. Investments from foreign countries, including those from advanced nations, will also flow more readily into these developing nations, further driving their economies toward future growth.
The different phases of economic cycles toss economies around the world. However, it’s interesting to see that these top economies don't budge easily from the positions they hold. When compared to the top 20 economies of 1980, 17 are still present on the list which means only three new entrants. In addition to the key players remaining almost the same, the analysis reveals these economies are the engine of growth, commanding majority of the global wealth. The nominal GDP of the top 10 economies adds up to about 67% of the world’s economy, while the top 20 economies contribute almost 81%. The remaining 172 countries together constitute less than one-fifth to the world’s economy.
Nominal GDP = gross domestic product, current prices, U.S. dollars
GDP based on PPP = gross domestic product based on purchasing-power-parity (PPP) valuation of country GDP, current international dollar)
Gross domestic product per capita, current prices, U.S. dollars
1. United States
Nominal GDP: $19.39 trillion GDP (PPP): $19.39 trillion
The U.S. has retained its position of being the world’s largest economy since 1871. The size of the U.S. economy was at $19.39 trillion in 2017 in nominal terms and is expected to reach $20.41 trillion in 2018. The U.S. is often dubbed as an economic superpower and that's because the economy constitutes almost a quarter of the global economy backed by advanced infrastructure, technology, and abundance of natural resources. While the U.S. economy is service-oriented, contributing almost 80% its GDP, it's manufacturing merely contributes about 15% of its output.
When the economies are assessed in terms of purchasing power parity, the U.S. loses its top spot to its close competitor China. In 2017, the U.S. economy, in terms of GDP (PPP) was at $19.39 trillion while the Chinese economy was measured at $23.16 trillion. The gap between the size of the two economies in terms of nominal GDP is expected to lessen by 2023; the U.S. economy is projected to grow to $24.53 trillion by 2023 followed closely by China at $21.57
2. China
Nominal GDP: $12.01 trillion GDP (PPP): $23.15 trillion
China has experienced exponential growth over the past few decades, breaking the barriers of a centrally planned, closed economy to evolve into a manufacturing and exporting hub of the world. China is often referred to as the "world’s factory" given its huge manufacturing and export base. However, over the years, the role of services has gradually increased and that of manufacturing as a contributor to GDP has declined relatively. Back in 1980, China was the seventh-largest economy with a GDP of $305.35 billion while the size of the U.S. then was $2.86 trillion. Since it initiated market reforms in 1978, the Asian giant has seen an economic growth averaging 10% annually. In recent years, the pace of growth has slowed although it remains high in comparison to its peer nations.
The World Bank reported a spurt in China’s economic growth in 2017 for the first time since 2010, mainly driven by a cyclical rebound in global trade. It projects a growth at 6.6% in 2018 which would sober down to around 5.5% by 2023. Over the years, the difference in the size of the Chinese and the U.S. economy has been shrinking rapidly. In 2017, the Chinese GDP in nominal terms stood at $12.01 trillion, lower than the U.S. by $7.37 trillion. In 2018, the gap is expected to reduce to $6.32 trillion and by 2023 the difference would be of $2.96 trillion. In terms of GDP in PPP, China is the largest economy with a GDP (PPP) of $23.15 trillion. By 2023, China GDP (PPP) would be $37.06 trillion. China’s huge population brings down its GDP per capita to $8,643.11 (seventy-second position).
3. Japan
Nominal GDP: $4.87 trillion GDP (PPP): $5.42 trillion
Japan is the third-largest economy in the world with a GDP of $4.87 trillion in 2017. The economy is expected to cross the $5 trillion mark in 2018. The financial crisis of 2008 rocked the Japanese economy and it’s been a challenging time for its economy since then. The global crisis triggered recession followed by weak domestic demand and huge public debt. When the economy was beginning to recover, it suffered a massive earthquake which hit the country socially and economically. While the economy has broken the deflationary spiral, economic growth remains muted.
Its economy will get some stimulus with the 2020 Olympics which keep the investment flow strong which is backed by a lax monetary policy by the Bank of Japan. The nominal GDP of Japan is $4.87 trillion which is expected to move up to $5.16 trillion in 2018. Japan slips to the fourth spot when GDP is measured in terms of PPP; GDP (PPP) was $5.42 billion in 2017 while its GDP per capita was $38,439.52 (25th spot).
4. Germany
Nominal GDP: $3.68 trillion GDP (PPP): $4.17 trillion
Germany is not just Europe’s largest economy but also the strongest. On the global scale, it is the fourth-largest economy in terms of nominal GDP with a $3.68 trillion GDP. The size of its GDP in terms of purchasing power parity is $4.17 trillion while its GDP per capita is $44,549.69 (17th place). Germany was the third-largest economy in nominal terms in 1980 with a GDP of $850.47 billion.
The nation has been dependent upon capital good exports which suffered a setback post-financial crisis of 2008. The economy grew by 1.9% and 2.5% in 2016 and 2017 respectively. However, IMF has revised growth downwards to 2.2% and 2.1% respectively in 2019 and 2020 given the threat of rising protectionism and Brexit. To revise its manufacturing strength in the current global scenario, Germany has launched Industrie 4.0 — its strategic initiative to establish the country as a lead market and provider of advanced manufacturing solutions.
5. United Kingdom
Nominal GDP: $2.62 trillion GDP (PPP): $2.91 trillion
The United Kingdom, with a $2.62 trillion GDP is the fifth-largest economy in the world. When compared in terms of GDP PPP, UK slips to the ninth spot with a GDP (PPP) of $2.91 trillion. It ranks 23rd in terms of GDP per capita which is $39,734.59. Its nominal GDP is estimated at $2.96 trillion during 2018, but its ranking is expected to slide to the seventh spot by 2023 with a GDP of $3.47 trillion.
Starting from 1992 till 2008, the economy of the UK witnessed an uptrend in each quarter. However, it witnessed a decline in its output for consecutive five quarters starting April 2008. The economy shrunk by 6% during these five quarters (between the first quarter of 2008 and the second quarter of 2009) and eventually took five years to grow back to the pre-recession levels, according to data from the Office of National Statistics. The economy of the UK is primarily driven by the services sector which contributes more than 75% of GDP with manufacturing, the second prominent segment followed by agriculture. Although agriculture is not a major contributor to its GDP, 60% of the U.K.’s food needs are produced domestically, even though less than 2% of its labor force is employed in the sector.
6. India
Nominal GDP: $2.61 trillion GDP (PPP): $9.45 trillion
India is the fastest-growing trillion-dollar economy in the world and the sixth-largest with a nominal GDP of $2.61 trillion. India is poised to become the fifth-largest economy overtaking the United Kingdom by 2019 as per the IMF projection. The country ranks third when GDP is compared in terms of purchasing power parity at $9.45 trillion. When it comes to calculating GDP per capita, India’s high population drags its nominal GDP per capita down to $1,982. The Indian economy was just $189.438 billion in 1980, ranking 13th on the list globally. India’s growth rate is expected to rise from 6.7% in 2017 to 7.3% in 2018 and 7.5% in 2019, as drags from the currency exchange initiative and the introduction of the goods and services tax fade according to IMF.
India’s post-independence journey began as an agrarian nation, however, over the years manufacturing and services sector have emerged strongly. Today, its service sector is the fastest-growing sector in the world, contributing to more than 60% to its economy and accounting for 28% of employment. Manufacturing remains as one of its crucial sectors and is being given due push via the governments' initiatives such as “Make in India”. Although the contribution of its agricultural sector has declined to around 17%, it still is way higher in comparison to the western nations. The economy’s strength lies in a limited dependence on exports, high saving rates, favorable demographics, and a rising middle class.
7. France
Nominal GDP: $2.58 trillion GDP (PPP): $2.83 trillion
France, the most-visited country in the world and is the third-largest economy of Europe and the seventh-largest in the world with a nominal GDP of $2.58 trillion. Its GDP in terms of purchasing power parity is around $2.83 trillion. The country offers a high standard of living to its people as reflected in its GDP per capita of $44,549. In recent years, the economic growth has slowed resulting in unemployment which has placed immense pressure on the government to reboot the economy. The World Bank has recorded unemployment rates at 10% during 2014, 2015 and 2016. During 2017, it declined to 9.681%.
In addition to tourism which remains very important for its economy, France is a leading agricultural producer, accounting for about one-third of all agricultural land within the European Union. France is the world’s sixth-largest agricultural producer and the second-largest agricultural exporter, after the United States. The manufacturing sector is majorly dominated by the chemical industry, automotive and armament industry. The economy has grown by 2.3% during 2017 and is expected to grow at 1.8% and 1.7% during 2018 and 2019 as per IMF.
8. Brazil
Nominal GDP: $2.05 trillion GDP (PPP): $3.24 trillion
Brazil is the largest and most populous nation in Latin America. With a nominal GDP of $2.05 trillion, Brazil is the eighth-largest economy in the world. The nation which had been riding on the commodity wave suffered multiple setbacks with the end of the commodity supercycle in addition to internal problems of corruption and political uncertainty which dampened the investment and business environment.
During the period 2006-10, the nation grew at an average 4.5%, moderating to around 2.8% around 2011-13. By the year 2014, it was barely growing at 0.1%. In 2016, Brazil contracted by 3.5% before rebounding by 1% in 2017. IMF projects the economy the economic growth to revive to 2.5% by 2019. Brazil is a part of the BRICS along with Russia, India, China and South Africa. The country has a GDP (PPP) of $3.24 trillion and a GDP per capita of $9,681.
9. Italy
Nominal GDP: $1.93 trillion GDP (PPP): $2.31 trillion
With a nominal GDP of $1.93 trillion, Italy is the world’s ninth-largest economy. Its economy is expected to expand to $2.5 trillion by 2023. In terms of GDP (PPP), its economy is worth $2.31 trillion and a per capita GDP of $31,984. Italy—a prominent member of the Eurozone and has been facing deep political and economic chaos. Its unemployment rate continues to be in double-digits while its public debt remains sticky at around 132% of GDP. On the positive side, exports and business investment are driving the economic recovery. The economy clocked 0.9% and 1.5% in 2016 and 2017 respectively. It is projected to edge down to 1.2% in 2018 and 1.0% in 2019.
10. Canada
Nominal GDP: $1.65 trillion GDP (PPP): $1.76 trillion
Canada displaced Russia to take the 10th spot in 2015 and has retained its position since then. Canada's nominal GDP is currently at $1.65 trillion and is expected to touch $1.79 trillion in 2018 and $2.43 trillion by 2023. Its per capita GDP of $45,077 is ranked 20th globally while its GDP of $1.76 trillion in terms of PPP pulls it down to the 17th spot. The country has contained the level of unemployment and is likely to further shrink. While services are the major sector, manufacturing is the cornerstone of is economy with 68% of its exports constituting of merchandise exports. Canada is laying a lot of emphasis on manufacturing which is crucial to its future economic growth. Canada registered a growth of 3% in 2017 vis-à-vis 1.4% in 2016 and is expected to grow at 2% during 2018 and 2019.
11. South Korea
Nominal GDP: $1.53 trillion GDP (PPP): $2.02 trillion
The South Korean economy known for conglomerates such as Samsung and Hyundai, is the 11th largest economy in the world with a nominal GDP of $1.53 trillion. The country has made incredible progress in the past couple of decades to establish itself as a high-tech industrialized nation.
South Korea over the past four decades has demonstrated incredible economic growth and global integration to become a high-tech industrialized economy. During the 1960’s its GDP per capita was among the poorer countries in the world which is now at the 29th spot with $29,981. Its GDP (PPP) is at $2.02 trillion. South Korea entered the trillion-dollar club in 2004 propelled by international trade and industrialization. It is among the top exporters in the world and presents great investment opportunities reflected in its ease of doing business ranking.
12. Russia
Nominal GDP: $1.52 trillion GDP (PPP): $4.01 trillion
Russia, the largest country in the world in terms of landmass is the 12th-largest economy in the world with a nominal GDP of $1.52 trillion. Russia moves up the ladder to the sixth spot for rankings with a $4.01 trillion GDP based on PPP.
The 1990’s were a rough period for its economy since it inherited a devastated industrial and agricultural sector along with the fundamentals of a centrally planned economy. During the next decade Russia witnessed growth at a healthy pace of 7%, however, this growth was led by the commodity boom. The dependence of the Russian economy on oil was exposed during the 2008-09 global financial crisis and eventually again in 2014. The situation worsened with the imposition of sanctions by the West. The economy contracted by 0.2% in 2016, however, it rebounded with a 1.5% growth in 2017. IMF projects a growth of 1.7% and 1.5% during 2018 and 2019 respectively.
13. Australia
Nominal GDP: $1.38 trillion GDP (PPP): $1.24 trillion
Australia is the 13th-largest economy with a nominal GDP of $1.38 trillion. The economy has grown at a healthy pace for the past two decades on the back of low unemployment, low public debt and inflation, robust exports, a strong service sector and a stable financial system. Given that Australia is a rich land in natural resources—and a major exporter of energy, natural resources and food. In terms of different sectors of its economy, agriculture and industry contribute about 4% and 26% each while its service sector which engages 75% of its employed population contributes 70% to its GDP. It is estimated that the economy of Australia will be close to the $2 trillion mark by 2023 and its GDP based on PPP which is currently at $1.24 trillion will be nearing $1.65 trillion during the same time period. Australia ranks 11th on the measure in terms of GDP per capita with $55,707 per capita GDP in 2017.
14. Spain
Nominal GDP: $1.31 trillion GDP (PPP): $1.77 trillion
The $1.3 trillion Spanish economy is the 14th-largest in the world. Post-Brexit, Spain is the fourth-largest economy in the Eurozone. The country with a population of 46.6 million has witnessed a long recessionary period (second quarter of 2008 till the third quarter of 2013) and is slowing returning to health on the back of record tourism and exports along with a revival in domestic consumption.
Spain replaced United Kingdom to become the second most visited country in the world with a huge influx of inbound tourists. In terms of sectors, agriculture has traditionally played a crucial role, however, with time the contribution of the sector has fallen to about 3%. The country remains a major exporter of olive oil, pork, and wine. Some of the prominent industrial sectors are automobiles, chemicals, pharmaceuticals, industrial machinery. The economy grew 3.1% in 2017 and is expected to edge down to 2.8% and 2.2% in 2018 and 2019 respectively.
15. Mexico
Nominal GDP: $1.15 trillion GDP (PPP): $2.45 trillion
Mexico, the second-largest economy in Latin America is the 15th-largest economy in the world with a GDP (nominal) of $1.15 trillion while its GDP in terms of PPP is $2.45 trillion. The same is expected to touch $1.58 trillion and $3.26 trillion respectively by 2023. Back in 1980, Mexico was the 10th-largest economy with a nominal GDP of $228.6 billion. The economy expanded by 2.9% and 2% during 2016 and 2017. Over the next two years, IMF projects a growth of 2.3% and 2.7% respectively. The share of agriculture in Mexican economy has remained under 4% over the last two decades while its industry and services contribute around 33% and 63% to its output. Automotive, oil and electronics are among the developed industries while financial services and tourism are prominent contributors within services.
16. Indonesia
Nominal GDP: $1.01 trillion GDP (PPP): $3.24 trillion
Indonesia is the largest economy in Southeast Asia and the 16th-largest on the global map. The Indonesian economy has shown tremendous progress over the last two decades. It was a victim of the Asian financial crisis in 1997, however, it has charted impressive growth ever since. The economy is now a part of trillion-dollar club with a nominal GDP of $1.01 trillion. The World Bank cites its enormous progress on poverty reduction— “cutting the poverty rate to more than half since 1999, to 10.9% in 2016.” Its GDP per capita at $3,875 is way higher than $857 in 2000. Indonesia, the fourth most populous nation is the seventh-largest economy with a $3.24 trillion GDP in terms of purchasing power parity. Among sectors, agriculture contributes about 14% to its GDP while industry and services add approximately 43% each to its output.
17. Turkey
Nominal GDP: $849.48 billion GDP (PPP): $2.17 trillion
Turkey with its 849.48 billion economy is the 17th-largest economy in the world. The share of Turkey’s middle-class increased from 18% to 41% of the population between 1993 and 2010, according to the World Bank and country joined the upper-middle income group in the late 2000’s.
The economy is projected to join the trillion-dollar club by 2020 while its GDP (PPP) will reach $3.05 trillion by 2023. Between 1960 and 2012, Turkey’s average annual GDP growth was 4.5%. The economy has been growing at an impressive pace since the 2000, driven by both industry and services. The economy witnessed macroeconomic and fiscal stability while its employment and income levels witnessed an increase. While the economy registered a 7.4% growth in 2017, however, it is projected to soften to 4.2% in 2018 amid a rising external debt, depreciating currency, rising inflation, and unemployment.
18. Netherlands
Nominal GDP: $849.48 billion GDP (PPP): $2.17 trillion
The Netherlands, the sixth largest economy in the European Union is the 18th-largest economy in the world. Back in 1980, Netherlands was the twelfth largest economy globally with a GDP of $189.49 billion. Today, the country has a nominal GDP of $825.745 billion and a GDP (PPP) of $916.07 billion. It ranks 13th on the basis of per capita income with GDP per capita of 48,345. The economy is backed by abundant natural resources, booming tourism and sound industries such as food processing, chemicals, electrical machinery and petroleum refining. The Netherlands can boast of highly mechanized, highly productive agricultural sector which makes it among the top agricultural exporters globally. Despite its small nation, Netherlands is a major player in the world's trade.
19. Saudi Arabia
Nominal GDP: $683.82 billion GDP (PPP): $1.77 trillion
Saudi Arabia is predominantly an oil-based economy. The country possesses around 18% of the world’s proven petroleum reserves. It ranks as the largest exporter of petroleum with oil and gas sector accounting for about 50% of its GDP and 70% of export earnings. Saudi Arabia is rich in other natural resources like natural gas, iron ore, gold, and copper. The economy showed recovery from the oil shock in 2016 with a 1.7% growth. In 2017, it incurred huge budget deficit financed by foreign reserves and bond sales. The country is looking to bolster its non-oil economy to diversify its economy and tackle the problem of unemployment. In 2017, its nominal GDP was $683.82 billion while its GDP based on PPP was $1.77 trillion. The economy which slumped by 0.9% in 2017 is expected to grow by 1.9% in 2018 and 2019.
20. Switzerland
Nominal GDP: $678.57 billion GDP (PPP): $517.17 billion
Switzerland, one of the most stable market economies in the world. It is the twentieth largest economy in the world with a nominal GDP of $678.57 billion. The country offers a very high standard of living for its people represented by the GDP per capita of $80,590, only behind Luxembourg. Switzerland has a booming tourism industry and a strong financial sector. Switzerland has a long tradition of industry, especially the clock and watches industry and pharmaceuticals. Agriculture only contributes about 1% to its GDP. The country has a highly skilled workforce and low unemployment (3%). The country’s economy benefits from its stable political system, sound infrastructure, and favorable tax rates. In recent years, its growth rate has hovered between 1-1.5%.
