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Top Countries by GDP and Economic Components (1970-2017)

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Countries by GDP and Economic Components (1970-2017)

While looking at the top countries by GDP is a useful big picture measure, it can also be informative to look at the components that make up an economy as well.

Examining a country’s economic building blocks can tell us a lot about what stage of development the country is in, and where competitive advantages may exist.

Analyzing GDP by Sector

Today’s “horse race” bar chart, by Number Story, is an entertaining historical look at the ranking of top countries by GDP, including the parts that make up the whole.

Here is the latest data as of 2018, as well as the largest sector according to data from the United Nations’ industry classification database:

RankCountryGDP (2018)Top Sector (% of total)2nd Largest Sector (% of total)
1🇺🇸 United States$20.6TOther (55%)Mining/Manufacturing/Utilities (15%)
2🇨🇳 China$13.6TOther (36%)Mining/Manufacturing/Utilities (33%)
3🇯🇵 Japan$4.9TOther (43%)Mining/Manufacturing/Utilities (23%)
4🇩🇪 Germany$3.6TOther (48%)Mining/Manufacturing/Utilities (25%)
5🇬🇧 UK$2.5TOther (55%)Retail/Restaurant/Hotels (14%)
6🇮🇳 India$2.5TOther (36%)Mining/Manufacturing/Utilities (22%)
7🇫🇷 France$2.5TOther (56%)Mining/Manufacturing/Utilities (13%)
8🇮🇹 Italy$1.9TOther (49%)Mining/Manufacturing/Utilities (20%)
9🇧🇷 Brazil$1.6TOther (50%)Mining/Manufacturing/Utilities (16%)
10🇨🇦 Canada$1.6TOther (52%)Mining/Manufacturing/Utilities (18%)
11🇰🇷 South Korea$1.6TOther (42%)Mining/Manufacturing/Utilities (31%)
12🇷🇺 Russia$1.5TOther (36%)Mining/Manufacturing/Utilities (28%)
13🇦🇺 Australia$1.4TOther (53%)Mining/Manufacturing/Utilities (17%)
14🇪🇸 Spain$1.3TOther (47%)Retail/Restaurant/Hotels (19%)
15🇲🇽 Mexico$1.2TOther (34%)Mining/Manufacturing/Utilities (24%)

Why are “Other Activities” so dominant in this breakdown?

It’s because of the way GDP that components are classified as data in the UN industry classification system, which is laid out below:

  1. Agriculture, hunting, forestry, fishing (ISIC A-B)
  2. Mining, manufacturing, utilities (ISIC C-E)
  3. Construction (ISIC F)
  4. Wholesale, retail trade, restaurants and hotels (ISIC G-H)
  5. Transport, storage and communication (ISIC I)
  6. Other activities, such as finance, healthcare, real estate, and tech (ISIC J-P)

Although agriculture, construction, or manufacturing have been a bedrock for economies in the past, developed countries skew towards adding economic value in different ways today.

Given that finance, government spending (healthcare, education, defense, etc.) and technology — all important modern industries — are included in “Other”, this makes the possibly outdated classification the biggest (and least useful) category to examine here.

Nevertheless, there is still information we can glean from this animated breakdown of GDP, spanning a period of almost 50 years.

A More Granular Look at GDP

In the past, we’ve shown you high level visualizations that break down the world’s $86 trillion GDP by country, or even projections on the largest countries by GDP in 2030 in PPP terms.

However, the animated bar chart shows something more granular that is compelling in its own right. By observing the evolution of countries’ economic components over time, some interesting observations emerge that would normally be lost in the big picture.

Japan’s Manufacturing Boom

At points during Japan’s heyday of growth during the 1980’s, manufacturing comprised nearly 30% of economic activity. By the mid-90s, this single segment of Japan’s economy was so valuable that, on its own, it would’ve placed fifth in the global ranking.

America Leading the Pack

While other countries switch positions, reordering as economies boom and bust, the U.S. has handily remained in top position.

Japan was the country that narrowed the gap between the first and second spot the most, though the country’s Lost Decade in the 1990s cut that ascension short.

During the years between 1970 and 2017, the United States was at its most dominant in 2006 when its GDP was triple the size of Japan’s. Of course, in recent years China has narrowed the gap considerably.

A Star Rising in the East

As one would expect, the building blocks of China’s economy looked very different in the 1970s than today.

The communist systems of the USSR and China are both easy to spot in the visualization. Agriculture played an outsized role, and industries like finance, real estate, and retail were understated compared to the profiles of countries that operated under a capitalist system.

In 1980, as the first Special Economic Zones were being created, three-quarters of China’s economy was based on agriculture, resource extraction, and manufacturing. Even as recently as the early ’90s, China wasn’t in the top 10 despite being the world’s most populous country.

Of course, that situation changed drastically over the next two decades. By the dawn of the 21st century, China ranked fifth in the world, and a decade later, China surpassed Japan to become the second largest economy globally.

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Which Countries Hold the Most U.S. Debt?

Foreign investors hold $7.3 trillion of the national U.S. debt. These holdings declined 6% in 2022 amid a strong U.S. dollar and rising rates.

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Which Countries Hold the Most U.S. Debt in 2022?

Today, America owes foreign investors of its national debt $7.3 trillion.

These are in the form of Treasury securities, some of the most liquid assets worldwide. Central banks use them for foreign exchange reserves and private investors flock to them during flights to safety thanks to their perceived low default risk.

Beyond these reasons, foreign investors may buy Treasuries as a store of value. They are often used as collateral during certain international trade transactions, or countries can use them to help manage exchange rate policy. For example, countries may buy Treasuries to protect their currency’s exchange rate from speculation.

In the above graphic, we show the foreign holders of the U.S. national debt using data from the U.S. Department of the Treasury.

Top Foreign Holders of U.S. Debt

With $1.1 trillion in Treasury holdings, Japan is the largest foreign holder of U.S. debt.

Japan surpassed China as the top holder in 2019 as China shed over $250 billion, or 30% of its holdings in four years.

This bond offloading by China is the one way the country can manage the yuan’s exchange rate. This is because if it sells dollars, it can buy the yuan when the currency falls. At the same time, China doesn’t solely use the dollar to manage its currency—it now uses a basket of currencies.

Here are the countries that hold the most U.S. debt:

RankCountryU.S. Treasury HoldingsShare of Total
1🇯🇵 Japan$1,076B14.7%
2🇨🇳 China$867B11.9%
3🇬🇧 United Kingdom$655B8.9%
4🇧🇪 Belgium$354B4.8%
5🇱🇺 Luxembourg$329B4.5%
6🇰🇾 Cayman Islands$284B3.9%
7🇨🇭 Switzerland$270B3.7%
8🇮🇪 Ireland$255B3.5%
9🇹🇼 Taiwan$226B3.1%
10🇮🇳 India$224B3.1%
11🇭🇰 Hong Kong$221B3.0%
12🇧🇷 Brazil$217B3.0%
13🇨🇦 Canada$215B2.9%
14🇫🇷 France$189B2.6%
15🇸🇬 Singapore$179B2.4%
16🇸🇦 Saudi Arabia$120B1.6%
17🇰🇷 South Korea$103B1.4%
18🇩🇪 Germany$101B1.4%
19🇳🇴 Norway$92B1.3%
20🇧🇲 Bermuda$82B1.1%
21🇳🇱 Netherlands$67B0.9%
22🇲🇽 Mexico$59B0.8%
23🇦🇪 UAE$59B0.8%
24🇦🇺 Australia$57B0.8%
25🇰🇼 Kuwait$49B0.7%
26🇵🇭 Philippines$48B0.7%
27🇮🇱 Israel$48B0.7%
28🇧🇸 Bahamas$46B0.6%
29🇹🇭 Thailand$46B0.6%
30🇸🇪 Sweden$42B0.6%
31🇮🇶 Iraq$41B0.6%
32🇨🇴 Colombia$40B0.5%
33🇮🇹 Italy$39B0.5%
34🇵🇱 Poland$38B0.5%
35🇪🇸 Spain$37B0.5%
36🇻🇳 Vietnam$37B0.5%
37🇨🇱 Chile$34B0.5%
38🇵🇪 Peru$32B0.4%
All Other$439B6.0%

As the above table shows, the United Kingdom is the third highest holder, at over $655 billion in Treasuries. Across Europe, 13 countries are notable holders of these securities, the highest in any region, followed by Asia-Pacific at 11 different holders.

A handful of small nations own a surprising amount of U.S. debt. With a population of 70,000, the Cayman Islands own a towering amount of Treasury bonds to the tune of $284 billion. There are more hedge funds domiciled in the Cayman Islands per capita than any other nation worldwide.

In fact, the four smallest nations in the visualization above—Cayman Islands, Bermuda, Bahamas, and Luxembourg—have a combined population of just 1.2 million people, but own a staggering $741 billion in Treasuries.

Interest Rates and Treasury Market Dynamics

Over 2022, foreign demand for Treasuries sank 6% as higher interest rates and a strong U.S. dollar made owning these bonds less profitable.

This is because rising interest rates on U.S. debt makes the present value of their future income payments lower. Meanwhile, their prices also fall.

As the chart below shows, this drop in demand is a sharp reversal from 2018-2020, when demand jumped as interest rates hovered at historic lows. A similar trend took place in the decade after the 2008-09 financial crisis when U.S. debt holdings effectively tripled from $2 to $6 trillion.

Foreign Holdings of U.S. Debt

Driving this trend was China’s rapid purchase of Treasuries, which ballooned from $100 billion in 2002 to a peak of $1.3 trillion in 2013. As the country’s exports and output expanded, it sold yuan and bought dollars to help alleviate exchange rate pressure on its currency.

Fast-forward to today, and global interest-rate uncertainty—which in turn can impact national currency valuations and therefore demand for Treasuries—continues to be a factor impacting the future direction of foreign U.S. debt holdings.

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