As the US dollar interest rate hike cycle draws to a close, the global economic landscape is undergoing new shifts.
The most striking of these is that the GDP gap between China and the United States has not narrowed further but has continued to widen, with Germany surpassing Japan to become the world's top three economies, and a country considered a "big dark horse" achieving an astonishing 7% growth rate.
2023 is over, and although full economic data has yet to be released, based on data from the first three quarters, this article provides a forward-looking analysis of the top 10 economies in 2023.
In the first three quarters of last year, the top 10 economies in terms of GDP were the United States, China, Germany, Japan, India, the United Kingdom, France, Italy, Brazil, and Canada. Among the top 10, 3 developing countries and 7 developed countries, the advantages of developed countries are still obvious, but developing countries are making rapid progress, and after 10 years, they may be able to compete in the courts.
Among the seven developed countries, the United States has the fastest economic growth, with GDP growth of 2 in the first three quarters5%, the growth rate of other countries is around 1%, and Germany is even more negative. But due to the impact of high inflation, the US GDP reached 20$28 trillion, and that's just three quarters of data, for the whole year, the US GDP reached about $27 trillion, which is not far from the $30 trillion mark. The U.S. economic data seems to be promising, but the quality of real growth is questioned due to high inflation, and the U.S. debt continues to increase.
China's GDP in the first three quarters was $13 trillion, up 5. year-on-year2%, more than the United States, and due to the low inflation rate, the economic increment is denominated in dollars, which is significantly less than that of the United States, which also means that the GDP gap between China and the United States will widen again in 2023.
The year with the smallest gap between the U.S. and China was 2021, when China's GDP was 1782 trillion dollars, 23 trillion in the United States32 trillion US dollars, a difference of 5$5 trillion. In 2022, inflation in the United States exploded, and in order to bring down inflation, the Federal Reserve continued to raise interest rates, and the dollar index rose sharply, with China's GDP of 1796 trillion dollars, 25 in the United States44 trillion dollars, a difference of 7$48 trillion, nearly $2 trillion more than in 2021.
In 2023, China's GDP is estimated to be around $18 trillion, and the gap with the United States has widened to $9 trillion.
But don't worry, the GDP gap between China and the United States has widened in the past two years, mainly because of the exchange rate, in fact, China's economic growth rate has been higher than that of the United States in the past two years, and it stands to reason that the gap between the Chinese and American economies will be further narrowed, but the high inflation in the United States has covered up the truth.
In 2024, the Fed will most likely stop raising interest rates and start cutting interest rates instead, releasing dollar liquidity to the world, the global economy will improve, and the dollar index will go all the way down.
I still firmly believe that during the period from 2028 to 2030, China's GDP will surpass that of the United States and become the world's first, and if the US debt collapses, the time will be advanced.
In 2023, the biggest change in the world economic landscape is that Germany will overtake Japan to become the world's fourth largest economy. Although the German economy is expected to appear 0A decline of 5%, but thanks to the appreciation of the euro and the impact of inflation, GDP in dollar terms is expected to reach 4$43 trillion. At the same time, GDP per capita is expected to reach 5$210,000. In contrast, Japan's economy is doing slightly better, but its economic aggregate is expected to decline sharply due to the severe depreciation of the yen, allowing Germany to overtake Japan.
Looking back at history, Japan was on par with Germany in economic strength in the 70s of the last century, with the two countries alternately leading. However, in the 80s, Japan's economy began to grow rapidly, leading Germany by a wide margin. In 1995, Japan's GDP was more than twice that of Germany, reaching its all-time high. However, Japan's economic bubble burst and ushered in the "lost two decades", and its GDP was eventually overtaken by Germany.
However, Japan will not stay in the fourth position in the world for long, and India below is eyeing it and has a tendency to replace it.
In the first three quarters of 2023, the fastest economic growth rate was not China, but India, reaching 71%。India's GDP in the first three quarters of last year was US$2,599.5 billion, with a gap of US$524.5 billion with Japan, and the annual gap was less than US$800 billion. According to India's current economic growth momentum and Japan's declining trend, India's GDP will surpass Japan's in three years or five years at a slower.
However, in the past few years, India has revised its GDP statistics several times, and even cow dung is included in GDP, so the outside world has always been skeptical of India's economic data. However, due to India's huge domestic market, even if the data is false, as long as the growth momentum is there, it is still a treasure land to attract international capital.
The European Union as a whole has almost zero economic growth, and the biggest victim of the global economy over the past year has not been Russia, but Western European countries. Looking at the data for the first three quarters of various countries, the UK grew by 05%, France grew by 07% and Italy grew by 07%, Germany, which has the reputation of "European engine", simply negative growth of 04%。Germany, as the leader of the European economy, has underperformed economically, mainly due to the double whammy of rising energy costs and a decline in manufacturing.
Although GDP growth in the UK and France remained positive, the growth rate was low, reflecting the weakness of the overall European economy. The uncertainty caused by the Russia-Ukraine conflict, the loss of cheap energy, and the high inflation rate have taken a huge toll on the European economy.
Brazil is once again in the top 10 in the world, but the economy is struggling and future growth is uncertain. Canada has a population of less than 40 million, but it has been able to rank among the world's top ten economic powers for a long time.
Amid global economic volatility, countries such as China and India have shown strong economic resilience. The future economic trend will be more complicated, and the possible interest rate cut policy of the United States will trigger the adjustment of global capital flows and monetary policy, affecting the trend of the dollar and the trend of other major currencies. 2024 will still be a year of uncertainty, but it will also be a year of hope.