Visualizing the Composition of the World Economy by GDP (PPP)
The Composition of the World Economy by GDP (PPP)
Earlier this month, we showed you the world’s $86 trillion economy broken down by country, using nominal GDP calculations.
While this is one useful way to view the global economic picture, it’s not the only way.
Today’s visualization, which comes to us from HowMuch.net, is similar in that it also uses a Voronoi diagram to display the composition of the world economy by GDP. However, by adjusting data for purchasing power parity (PPP), it produces a very different view of how global productivity breaks down.
What is PPP?
Purchasing power parity, or PPP, is an economic theory that can be applied to adjust the prices of goods in a given market.
In essence, instead of using current market rates for prices (such as in nominal data), PPP tries to more accurately account for differences in the cost of living between countries – especially in places where labor and goods are far cheaper.
When applied to GDP measurements, PPP can help provide a more accurate picture of actual productivity. For example, a taxi ride in Bolivia may be far cheaper than one in New York City, even though it is the same service provided over the same distance.
Applying PPP to GDP figures can help correct for these types of differences.
Ranked: Economies by GDP (PPP)
After adjusting for PPP, how does the composition of the global economy change from the nominal numbers?
Below are the 15 largest economies by GDP (PPP), as well as how their ranking changed from the previous chart, which used nominal data.
|Rank||Country||GDP (2018, PPP)||Share of World Total||Change (vs. nominal rank)|
|#1||🇨🇳 China||$25.4 trillion||18.6%||+1|
|#2||🇺🇸 United States||$20.5 trillion||15.0%||-1|
|#3||🇮🇳 India||$10.5 trillion||7.7%||+4|
|#4||🇯🇵 Japan||$5.5 trillion||4.0%||-1|
|#5||🇩🇪 Germany||$4.5 trillion||3.3%||-1|
|#6||🇷🇺 Russia||$4.0 trillion||2.9%||+5|
|#7||🇮🇩 Indonesia||$3.5 trillion||2.6%||+9|
|#8||🇧🇷 Brazil||$3.4 trillion||2.5%||+1|
|#9||🇬🇧 United Kingdom||$3.1 trillion||2.3%||-4|
|#10||🇫🇷 France||$3.1 trillion||2.3%||-4|
|#11||🇮🇹 Italy||$2.5 trillion||1.9%||-3|
|#12||🇲🇽 Mexico||$2.5 trillion||1.9%||+3|
|#13||🇹🇷 Turkey||$2.4 trillion||1.7%||+6|
|#14||🇰🇷 Korea, Rep.||$2.1 trillion||1.5%||-2|
|#15||🇪🇸 Spain||$1.9 trillion||1.4%||-1|
Using GDP (PPP), the world economy is worth $136.5 trillion in current international U.S. dollars.
What changed the most from the nominal ranking?
With PPP, you can see Indonesia ($3.5 trillion) jumps up the ranking by nine spots to become the #7 ranked economy. Likewise, Turkey ($2.4 trillion) and India ($10.5 trillion) both climb the ranking by six and four spots respectively. China also switches with the U.S., to become the world’s largest economy.
On the flipside, it is often the more developed economies with strong currencies that see a drop in their rankings. After adjusting for PPP, the United States, Japan, Germany, France, Italy, South Korea, Spain, and the U.K. all slip from their previous positions.
For more on GDP (PPP), see the projections for the world’s largest 10 economies in 2030 that we published earlier this year.
Charted: Public Trust in the Federal Reserve
Public trust in the Federal Reserve chair has hit its lowest point in 20 years. Get the details in this infographic.
- Gallup conducts an annual poll to gauge the U.S. public’s trust in the Federal Reserve
- After rising during the COVID-19 pandemic, public trust has fallen to a 20-year low
Charted: Public Trust in the Federal Reserve
Each year, Gallup conducts a survey of American adults on various economic topics, including the country’s central bank, the Federal Reserve.
More specifically, respondents are asked how much confidence they have in the current Fed chairman to do or recommend the right thing for the U.S. economy. We’ve visualized these results from 2001 to 2023 to see how confidence levels have changed over time.
Methodology and Results
The data used in this infographic is also listed in the table below. Percentages reflect the share of respondents that have either a “great deal” or “fair amount” of confidence.
|Year||Fed chair||% Great deal or Fair amount|
Data for 2023 collected April 3-25, with this statement put to respondents: “Please tell me how much confidence you have [in the Fed chair] to recommend the right thing for the economy.”
We can see that trust in the Federal Reserve has fluctuated significantly in recent years.
For example, under Alan Greenspan, trust was initially high due to the relative stability of the economy. The burst of the dotcom bubble—which some attribute to Greenspan’s easy credit policies—resulted in a sharp decline.
On the flip side, public confidence spiked during the COVID-19 pandemic. This was likely due to Jerome Powell’s decisive actions to provide support to the U.S. economy throughout the crisis.
Measures implemented by the Fed include bringing interest rates to near zero, quantitative easing (buying government bonds with newly-printed money), and emergency lending programs to businesses.
Confidence Now on the Decline
After peaking at 58%, those with a “great deal” or “fair amount” of trust in the Fed chair have tumbled to 36%, the lowest number in 20 years.
This is likely due to Powell’s hard stance on fighting post-pandemic inflation, which has involved raising interest rates at an incredible speed. While these rate hikes may be necessary, they also have many adverse effects:
- Negative impact on the stock market
- Increases the burden for those with variable-rate debts
- Makes mortgages and home buying less affordable
Higher rates have also prompted many U.S. tech companies to shrink their workforces, and have been a factor in the regional banking crisis, including the collapse of Silicon Valley Bank.
Where does this data come from?
Source: Gallup (2023)
Data Notes: Results are based on telephone interviews conducted April 3-25, 2023, with a random sample of –1,013—adults, ages 18+, living in all 50 U.S. states and the District of Columbia. For results based on this sample of national adults, the margin of sampling error is ±4 percentage points at the 95% confidence level. See source for details.
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