by James Corbett, The International Forecaster:
Depending on which columnist you follow or which headline writer you trust, this month is either the month that the Chinese economy officially overtook the US to become the world’s largest, or it isn’t. The quibbling comes after the latest data dump from the IMF tallying the GDP of the world’s economy.
According to the data, China’s economy just leapfrogged the US with an estimated 2014 output of $17.6 trillion to America’s $17.4 trillion, representing 16.5% of the global economy vs. 16.3%.
The catch? These GDP figures are based on purchasing-power parity (PPP), an economic measure that compares output in real terms, ignoring exchange rate fluctuations. Traditionally, global GDP figures have been calculated in US dollar terms to paint a more accurate picture of how much a country’s economy is “worth” on the global market. When measured in these terms, not much has changed. The US is still the world’s largest economy, with 22% of global GDP, the Eurozone as a whole is second with 17%, and China comes in third at a respectable (but still lagging) 11%.
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