Frik Els | April 30, 2014
A new study by the World Bank predicts that the US will lose its status as the world’s largest economy later this year.
Previous studies forecast the US will only lose the top spot – which it took from the United Kingdom in 1872 – at the end of this decade at the soonest.
The report by the International Comparison Program at the World Bank estimates total economic output between countries by using purchasing power parity or PPP which takes into account the relative costs of goods and services and inflation rates, rather than simply using volatile exchange rates which give you nominal GDP figures.
The World Bank’s updated methodology for PPP indicates that the gap of $3.4 trillion in 2012 (on a nominal basis that gap was closer to $8 trillion) has now shrunk dramatically.
In 2005, the ICP estimated China’s economy was less than half the size of the US, accounting for only 43.1% of the US total. That proportion grew to 86.9% in 2011. More >>>>
Previous studies forecast the US will only lose the top spot – which it took from the United Kingdom in 1872 – at the end of this decade at the soonest.
The report by the International Comparison Program at the World Bank estimates total economic output between countries by using purchasing power parity or PPP which takes into account the relative costs of goods and services and inflation rates, rather than simply using volatile exchange rates which give you nominal GDP figures.
The World Bank’s updated methodology for PPP indicates that the gap of $3.4 trillion in 2012 (on a nominal basis that gap was closer to $8 trillion) has now shrunk dramatically.
In 2005, the ICP estimated China’s economy was less than half the size of the US, accounting for only 43.1% of the US total. That proportion grew to 86.9% in 2011. More >>>>
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