Overview of Major Economies
The US, China, Japan, Germany, and India are the leading economies around the world in terms of real GDP. The US real GDP topped with $18.6 trillion in 2021, followed by China with a value of $12.7 trillion. Japan's real GDP rose to $6 trillion during the same period, placing it third globally. The other two largest economies are Germany and India, with real GDPs of $3.8 trillion and $2.9 trillion, respectively.
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.
Factors Affecting the Growth of Leading Economies
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 from COVID-19. China is leading the vaccination race as more than 90% of its population are fully vaccinated.
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 several countries have imposed economic sanctions on Russia like the US, Japan, and Germany. The US has banned the import of Russian oil, liquefied natural gas, and coal, while Japan will ban exporting Russia-bound oil refinery equipment.
Rising Inflation and Interest Rates:
The inflation rate in developing and advanced economies have been rising, causing central banks to tighten monetary policy and raise interest rates to control price rises. Inflation is projected at 5.7% in advanced economies and 8.7% in emerging market and developing economies—1.8 and 2.8 percentage points higher than that projected in January 2022, according to IMF.
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