Gross domestic product based on purchasing power parity (PPP)

Did you know that in 2016 China overtook the USA as the largest economy in the world when measured by purchasing power parity (PPP)? What will China's continued rise mean for our future?

The United States is commonly cited as the world’s biggest economy since it has the highest nominal gross domestic product (GDP). However, when measured by GDP based on PPP, China has been the largest economy since 2016. Purchasing power parity measures prices of specific goods to compare the purchasing power of countries’ currencies, and is arguably a more useful way to compare countries than by nominal GDP.

As the chart above shows, the gap in GDP based on PPP between China and the USA is widening. China’s position as the largest economy will surely have far-reaching consequences for the rest of the world.