Overview of US’s Real GDP
The US is the largest economy in the world. The US real GDP hit $18.7 trillion in 2021, an increase of 5.7% over the previous year. The US real GDP grew at a CAGR of 2.0% between 2010 and 2021. However, an increase in COVID-19 cases, rising inflation, and conflict between Russia and Ukraine dimmed the US growth outlook.
Outlook on Global Economy
Real GDP refers to base year prices, which include inflation. Changes in real GDP indicate the increase or decrease in the volume of economic activity and measure economic growth.
The US, China, Japan, Germany, and India are the leading economies around the world in terms of real GDP. In 2021, China had the most significant real GDP with a value of $12.7 trillion, after the US. Japan ranked third globally in real GDP during the same period with $6 trillion. The other two leading economies are Germany and India, with real GDPs of $3.8 trillion and $2.9 trillion, respectively.
Factors Affecting the Global Economy
A rise in COVID-19 cases:
As a result of Omicron, a new variant of COVID-19, more cases have been reported worldwide, resulting in the disruption of supply chain management. However, the global vaccination drive has reduced the fatality rate from the coronavirus.
Russia-Ukraine war:
A prolonged conflict between Russia and Ukraine will continue to affect global economic growth. Investment and trade have been adversely affected due to the war as economic sanctions have been imposed on Russia, and several big companies have stopped their operations in the country.
Rising Inflation and Interest Rates:
As a result of rising inflation rates in both developing and advanced economies, central banks have been forced to tighten monetary policy and raise interest rates to keep prices from rising. However, a steady increase in interest rates could cause financial distress in some economies.
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