Just last Friday, October 19th, the World Development Report 2008 was published by the World Bank. This is the most reliable and extensively used source of economic data of all the countries, and as such, receives a lot of attention not only from economists worldwide but also from other analists that track the evolution of the world economy throughout time. The report always includes as Table 1 the “Key indicators of development” that provides the basic data on most countries of the world. Its fifth column refers to Gross National Income (GNI) measured by the World Bank Atlas method, the most extensively used way of measuring the size of the different economies of the world. This is a close approximation to the GDP’s of each country, although there are small differences due to income from foreign sources, and income of your factors of production abroad. For the purposes of this post we can think of GNI as a very close estimate of GDP measured at current exchange rates. There is an alternative way of measuring GDP’s which is based on Purchasing Power Parity (PPP), but we will leave that forr another post.

Tthe new numbers show no changes on the ten largest economies of the world, although there may be some changes coming in the next couple of years. The largest economy in the world is the United States, which is no surprise. At 13.4 trillion (official numbers for year 2006), the US represents by itself 28% of total GDP of the world. This is a growing number but a slightly decreasing percentage due to the fast growth of emerging countries. At a still significant distance we have Japan, as the second largest economy of the world, with a GDP of 4.9 trillion US dollars (11% of the world’s GDP).

The third largest economy continues to be Germany, but it is not clear whether it will be able to maintain this position in 2 or 3 years. Its GDP is 3.0 trillion, while China consolidates its fourth place for the second year in a row with a GDP of 2.6 trillion. The distance between Germany and China seems still large, but with growth rates of more than 10% and a slowly appreciating yuan (which makes Chinese production represent more US dollars), the Chinese are catching up at a fast pace.

After China are Great Britain, with a GDP of 2.4 trillion, and France, with 2.3 trillion, maintaining the fifth and sixth positions of the previous year. Italy, with 1.9 trillion is seventh, and Spain and Canada also keep the same places they held last year with 1.2 and 1.1 trillion respectively. The tenth economy in the world is India, also in this position for the second year in a row, with 906 billion US dollars.

But we should keep an eye on the next group. Brazil, with 892 billion, Korea, with 856 billion, and Russia with 822 billion occupy positions 11 to 13, and complete the inclusion of all the BRIC countries (Brazil, Russia, India and China). Right after Russia are Mexico (820 billion) and Australia (739 billion), to complete the list of the 15 largest economies of the world. But the trend is clear. There are already 2 emerging economies among the largest 10 of the world, and even though there is still some distance, it is very likely that in a few years there may be four, in particular if Russia maintains its growth rates and Brazil continues to increase its growth while reducing inflation. But as always, only time will tell whether these trends continue or there are changes that modify this forecast.