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Ranked: The Megaregions Driving the Global Economy

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Ranked: The Megaregions Driving the Global Economy

If you’ve ever flown cross-country in a window seat, chances are, the bright lights at night have caught your eye. From above, the world tells its own story—as concentrated pockets of bright light keep the world’s economy thriving.

Today’s visualization relies on data compiled by CityLab researchers to identify the world’s largest megaregions. The team defines megaregions as:

  • Areas of continuous light, based on the latest night satellite imagery
  • Capturing metro areas or networks of metro areas, with a combined population of 5 million or higher
  • Generating economic output (GDP) of over $300 billion, on a PPP basis

The satellite imagery comes from the NOAA, while the base data for economic output is calculated from Oxford Economics via Brookings’ Global Metro Monitor 2018.

It’s worth pointing out that each megaregion may not be connected by specific trade relationships. Rather, satellite data highlights the proximity between these rough but useful regional estimates contributing to the global economy—and supercities are at the heart of it.

From Megalopolis to Megaregion

Throughout history, academics have described vast, interlinked urban regions as a ‘megalopolis’, or ‘megapolis’. Economic geographer Jean Gottman popularized the Greek term, referring to the booming and unprecedented urbanization in Bos-Wash—the northeast stretch from Boston and New York down to Washington, D.C.:

This region has indeed a “personality” of its own […] Every city in this region spreads out far and wide around its original nucleus.

Gottmann, Megalopolis (1961)

By looking at adjacent metropolitan areas rather than country-level data, it can help provide an entirely new perspective on the global distribution of economic activity.

Where in the world are the most powerful urban economic clusters today?

The Largest Megaregions Today

The world’s economy is a sum of its parts. Each megaregion contributes significantly to the global growth engine, but arguably, certain areas pull more weight than others.

MegaregionCitiesRegionPopulationEconomic Output (EO)EO per Capita
1. Bos-WashNew York, Washington, D.C., BostonNorth America 47.6M$3,650B$76,681
2. Par-Am-MunParis, Amsterdam, Brussels, MunichEurope43.5M$2,505B$57,586
3. Chi-PittsChicago, Detroit, Cleveland, PittsburghNorth America32.9M$2,130B$64,742
4. Greater TokyoTokyoAsia39.1M$1,800B$46,036
5. SoCalLos Angeles, San DiegoNorth America22M$1,424B$64,727
6. Seoul-SanSeoul, BusanAsia35.5M$1,325B$37,324
7. Texas TriangleDallas, Houston, San Antonio, AustinNorth America18.4M$1,227B$66,685
8. BeijingBeijing, TianjinAsia37.4M$1,226B$32,781
9. Lon-Leed-ChesterLondon, Leeds, ManchesterEurope22.6M$1,177B$52,080
10. Hong-ShenHong Kong, ShenzhenAsia19.5M$1,043B$53,487
11. NorCalSan Francisco, San JoseNorth America 10.8M$925B$85,648
12. ShanghaiShanghai, HangzhouAsia 24.2M$892B$36,860
13. TaipeiTaipeiAsia16.7M$827B$49,521
14. São PaoloSão PaoloSouth America33.5M$780B$23,284
15. Char-LantaCharlotte, AtlantaNorth America 10.5M$656B$62,476
16. CascadiaSeattle, PortlandNorth America8.8M$627B$71,250
17. Ista-BursIstanbul, BursaMENA14.8M$626B$42,297
18. Vienna-BudapestVienna, BudapestEurope12.8M$555B$43,359
19. Mexico CityMexico CityNorth America24.5M$524B$21,388
20. Rome-Mil-TurRome, Milan, TurinEurope13.8M$513B$37,174
21. Singa-LumpurSingapore, Kuala LumpurAsia12.7M$493B$38,819
22. Cairo-AvivCairo, Tel AvivMENA19.8M$472B$23,838
23. So-FloMiami, TampaNorth America 9.1M$470B$51,648
24. Abu-DubaiAbu Dhabi, DubaiMENA5M$431B$86,200
25. Osaka-Nagoya (tied)Osaka, NagoyaAsia9.1M$424B$46,593
25. Tor-Buff-Chester (tied)Toronto, Buffalo, RochesterNorth America8.5M$424B$49,882
27. Delhi-LahoreNew Delhi, LahoreAsia27.9M$417B$14,946
28. Barcelona-LyonBarcelona, LyonEurope7M$323B$46,143
29. ShandongJinan, Zibo, DongyingAsia14.2M$249B$17,535
Total602.2M$28,135B$46,720

Altogether, these powerhouses bring in over $28 trillion in economic output.

Unsurprisingly, Bos-Wash reigns supreme even today, with $3.6 trillion in economic output, over 13% of the total. The corridor hosts some of the highest-paying sectors: information technology, finance, and professional services.

The largest city in Brazil, São Paulo, is the only city in the Southern Hemisphere to make the list. The city was once heavily reliant on manufacturing and trade, but the $780 billion city economy is now embracing its role as a nascent financial hub.

On the other side of the world, the cluster of Asian megaregions combines for $8.7 trillion in total economic output. Of these, Greater Tokyo in Japan is the largest, while Shandong might be a name that fewer people are familiar with. Sandwiched between Beijing and Shanghai, the coastal province houses multiple high-tech industrial and export processing zones.

The data is even more interesting when broken down into economic output per capita—Abu-Dubai churns out an impressive $86,200 per person. Meanwhile, Delhi-Lahore is lowest on the per-capita list, at $14,946 per person across nearly 28 million people.

Where To Next?

This trend shows no sign of slowing down, as megacities are on the rise in the coming decade. Eventually, more Indian and African megaregions will make its way onto this list, led by cities like Lagos and Chennai.

Stay tuned to Visual Capitalist for a North America-specific outlook coming soon, and a deep dive into the biggest factors contributing to the growth of these megaregions.

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Shapes of Recovery: When Will the Global Economy Bounce Back?

Economic recovery from COVID-19 could come in four shapes—L, U, W, and V. What do they mean, and what do global CEOs see as the most likely?

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The Shape of Economic Recovery, According to CEOs

Is the glass half full, or half empty?

Whenever the economy is put through the ringer, levels of optimism and pessimism about its potential recovery can vary greatly. The current state mid-pandemic is no exception.

This graphic first details the various shapes that economic recovery can take, and what they mean. We then dive into which of the four scenarios are perceived the most likely to occur, based on predictions made by CEOs from around the world.

The ABCs of Economic Recovery

Economic recovery comes in four distinct shapes—L, U, W, and V. Here’s what each of these are characterized by, and how long they typically last.

  • L-shape
    This scenario exhibits a sharp decline in the economy, followed by a slow recovery period. It’s often punctuated by persistent unemployment, taking several years to recoup back to previous levels.
  • U-shape
    Also referred to as the “Nike Swoosh” recovery, in this scenario the economy stagnates for a few quarters and up to two years, before experiencing a relatively healthy rise back to its previous peak.
  • W-shape
    This scenario offers a tempting promise of recovery, dips back into a sharp decline, and then finally enters the full recovery period of up to two years. This is also known as a “double-dip recession“, similar to what was seen in the early 1980s.
  • V-shape
    In this best-case scenario, the sharp decline in the economy is quickly and immediately followed by a rapid recovery back to its previous peak in less than a year, bolstered especially by economic measures and strong consumer spending.

Another scenario not covered here is the Z-shape, defined by a boom after pent-up demand. However, it doesn’t quite make the cut for the present pandemic situation, as it’s considered even more optimistic than a V-shaped recovery.

Depending on who you ask, the sentiments about a post-pandemic recovery differ greatly. So which of these potential scenarios are we really dealing with?

How CEOs Think The Economy Could Recover

The think tank The Conference Board surveyed over 600 CEOs worldwide, to uncover how they feel about the likelihood of each recovery shape playing out in the near future.

The average CEO felt that economic recovery will follow a U-shaped trajectory (42%), eventually exhibiting a slow recovery coming out of Q3 of 2020—a moderately optimistic view.

However, geography seems to play a part in these CEO estimates of how rapidly things might revert back to “normal”. Over half of European CEOs (55%) project a U-shaped recovery, which is significantly higher than the global average. This could be because recent COVID-19 hotspots have mostly shifted to other areas outside of the continent, such as the U.S., India, and Brazil.

Here’s how responses vary by region:

RegionL-shapeU-shapeW-shapeV-shape
Global (N=606)32%42%16%11%
U.S. (N=103)26%42%23%9%
Europe (N=110)29%55%12%4%
China (N=122)25%43%11%21%
Japan (N=95)49%26%23%1%
Gulf Region (N=16)57%26%17%-

In the U.S. and Japan, 23% of CEOs expect a second contraction to occur, meaning that economic activity could undergo a W-shape recovery. Both countries have experienced quite the hit, but there are stark differences in their resultant unemployment rates—15% at its peak in the U.S., but a mere 2.6% in Japan.

In China, 21% of CEOs—or one in five—anticipate a quick, V-shaped recovery. This is the most optimistic outlook of any region, and with good reason. Although economic growth contracted by 6.8% in the first quarter, China has bounced back to a 3.2% growth rate in the second quarter.

Finally, Gulf Region CEOs feel the most pessimistic about potential economic recovery. In the face of an oil shock, 57% predict the economy will see an L-shaped recovery that could result in depression-style stagnation in years to come.

The Economic Recovery, According to Risk Analysts

At the end of the day, CEO opinions are all over the map on the potential shape of the economic recovery—and this variance likely stems from geography, cultural biases, and of course the status of their own individual countries and industries.

Despite this, portions of all cohorts saw some possibility of an extended and drawn-out recovery. Earlier in the year, risk analysts surveyed by the World Economic Forum had similar thoughts, projecting a prolonged recession as the top risk of the post-COVID fallout.

It remains to be seen whether this will ultimately indeed be the trajectory we’re in store for.

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The $88 Trillion World Economy in One Chart

The world’s total GDP crested $88 trillion in 2019—but how are the current COVID-19 economic contractions affecting its future outlook?

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The $88 Trillion World Economy in One Chart

The global economy can seem like an abstract concept, yet it influences our everyday lives in both obvious and subtle ways. Nowhere is this clearer than in the current economic state amid the throes of the pandemic.

This voronoi-style visualization from HowMuch relies on gross domestic product (GDP) data from the World Bank to paint a picture of the global economy—which crested $87.8 trillion in 2019.

Editor’s note: Annual data on economic output is a lagging indicator, and is released the following year by organizations such as the World Bank. The figures in this diagram provide a snapshot of the global economy in 2019, but do not necessarily represent the impact of recent developments such as COVID-19.

Top 10 Countries by GDP (2019)

In the one-year period since the last release of official data in 2018, the global economy grew approximately $2 trillion in size—or about 2.3%.

The United States continues to have the top GDP, accounting for nearly one-quarter of the world economy. China also continued to grow its share of global GDP, going from 15.9% to 16.3%.

RankCountryGDP% of Global GDP
#1🇺🇸 U.S.$21.4T24.4%
#2🇨🇳 China$14.3T16.3%
#3🇯🇵 Japan$5.1T5.8%
#4🇩🇪 Germany$3.9T4.4%
#5🇮🇳 India$2.9T3.3%
#6🇬🇧 UK$2.8T3.2%
#7🇫🇷 France$2.7T3.1%
#8🇮🇹 Italy$2.0T2.3%
#9🇧🇷 Brazil$1.8T2.1%
#10🇨🇦 Canada$1.7T2.0%
Top 10 Countries$58.7 trillion66.9%

In recent years, the Indian economy has continued to have an upward trajectory—now pulling ahead of both the UK and France—to become one of the world’s top five economies.

In aggregate, these top 10 countries combine for over two-thirds of total global GDP.

2020 Economic Contractions

So far this year, multiple countries have experienced temporary economic contractions, including many of the top 10 countries listed above.

The following interactive chart from Our World in Data helps to give us some perspective on this turbulence, comparing Q2 economic figures against those from the same quarter last year.

One of the hardest hit economies has been Peru. The Latin American country, which is about the 50th largest in terms of GDP globally, saw its economy contract by 30.2% in Q2 despite efforts to curb the virus early.

Spain and the UK are also feeling the impact, posting quarterly GDP numbers that are 22.1% and 21.7% smaller respectively.

Meanwhile, Taiwan and South Korea are two countries that may have done the best at weathering the COVID-19 storm. Both saw minuscule contractions in a quarter where the global economy seemed to grind to a halt.

Projections Going Forward

According to the World Bank, the global economy could ultimately shrink 5.2% in 2020—the deepest cut since WWII.

See below for World Bank projections on GDP in 2020 for when the dust settles, as well as the subsequent potential for recovery in 2021.

Country/ Region / Economy Type2020 Growth Projection2021E Rebound Forecast
United States-6.1%4.0%
Euro Area-9.1%4.5%
Advanced economies-7.0%3.9%
Emerging economies-2.5%4.6%
East Asia and Pacific-0.5%6.6%
Europe and Central Asia-4.7%3.6%
Latin America and the Caribbean-7.2%2.8%
Middle East and North Africa-4.2%2.3%
South Asia-2.7%2.8%
Sub-Saharan Africa-2.8%3.1%
Global Growth-5.2%4.2%

Source: World Bank Global Economic Prospects, released June 2020

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