We recently compiled a list of the 50 Biggest Economies in the World by the End of 2024 and in this article we will look at the country that topped our rankings.
A Brief Analysis of the World Economic Outlook
According to the United Nations, the global economic outlook has improved since January. The global economy is now forecasted to grow at 2.7% during the year against the previous forecast of 2.4%. The improved economic outlook in Q2 of 2024 is mainly due to strong economic performance in the United States backed by a strong labor market delivering real income growth. Other major economies including the European Union and the United Kingdom are bringing down inflation without triggering a recession or increasing unemployment, and an improved economic prospect for large developing economies such as India and Brazil also fosters global growth.
The near-term economic prospects of major countries are diverse and the overall global economic projections are cautious due to higher interest rates, escalating geo-political risks, and worsening climate change risks. For instance, growth prospects for two of the largest economies in the world, the United States and China vary. While the economic growth in the United States continues to improve from 1.4% during the start of 2024 to 2.3% in June, growth in China is expected to moderate from 5.2% in 2023 to 4.8% in 2024, mainly due to the risks from the property sector of China and the pent up in consumer demand after the lifting of pandemic restrictions. However, the enhanced policy support by the government is forecasted to boost investment in infrastructure and strategic sectors in China. If you want to read more about the global economies you can also look at the 24 Fastest Growing Economies in the World in 2024.
Can AI be a Game Changer for the Global Economy
According to International Data Corporation (IDC), the global AI software market was valued at $64 billion in 2022 and is forecasted to grow at a compound annual growth rate of 31.4% to reach $251 billion by 2027. Moreover, the global revenues for the AI market are projected to grow at a CAGR of 19% to reach $900 billion by 2026. According to the Bank of America, AI and Big Data have the potential to contribute approximately $15.7 trillion to the global economy by 2030, whereas open data is forecasted to add around $3.2 trillion to $5.4 trillion in economic value to the global economy by increasing productivity, improving the healthcare, and reducing emissions.
AI can boost the world economic outlook in three ways, firstly by increasing labor productivity by approximately 40% via automation, secondly, the problem-solving and self-learning ability of AI will increase its utility over time for economies and companies with high AI adoption rates. Lastly, it has the potential to drive public and private investments. According to McKinsey, funding for generative AI went up by 71.4% YoY in 2022. Moreover, the global private investment in AI increased by 48% in 2021 and amounted to $93.5 billion, almost double the total private investment when compared to 2020.
Developed economies including North America and China are forecasted to witness the biggest gains from AI. According to PwC, AI can enhance the GDP of China and the US by 26.1% and 14.5% by 2030, respectively, mainly due to their advanced technological infrastructure and consumer readiness for AI adoption.
Microsoft Corporation (NASDAQ:MSFT) is a leading technology company globally renowned for its support software, services, devices, and office productivity tools. The company through its Azure AI and cloud services is helping other companies including CallMiner, PwC, Accenture, TCS, and many more to build their own AI solutions thereby contributing to smooth AI adoption globally.
The company delivered a record third quarter, with revenue for the intelligent cloud segment increasing the highest by 21% to $26.7 billion. Growth in the segment was mainly driven by Azure and other cloud services contributing 24% and 31%, respectively. The strategic partnership of Microsoft Corporation’s (NASDAQ:MSFT) Azure and Open AI is orchestrating a new era of AI transformation. More than 65% of the fortune 500 companies now use the Azure Open AI Service.
Microsoft is introducing new AI technologies to support companies of all scales and sizes. On April 23, Microsoft introduced Phi-3, a set of small language models (SLMs) that are most capable, cost-effective, and outperforming same-size models in the market. Companies including LTIMindtree and PwC are already using Phi-3 to access third-party APIs including those from Meta, Cohere, and Mistral. On the other hand Azure Arc, a hybrid multi-cloud management system continues to grow and support organizations such as the World Bank to streamline their cloud migrations. Azure Arc customers grew twice year-on-year and now has approximately 33,000 customers.
Overall Microsoft Corporation (NASDAQ:MSFT) witnessed an 80% increase for $100 million plus Azure deals year-over-year, whereas the number of $10 million plus deals almost doubled during the same time. For instance, on June 3, Microsoft and Hitachi, a multinational conglomerate, signed a three-year, multibillion-dollar strategic partnership for creating innovative industry solutions. Under the agreement, Hitachi will integrate various services from Microsoft including Microsoft Cloud, Azure Open AI, and GitHub Copilot into its Lumada solutions to induce growth into its business and increase the productivity of 270,000 employees.
A hand pointing from the United States to the global markets represnted in a map representing potential investment opportunities for U.S. investors.
Our Methodology
To curate the list of the 50 biggest economies in the world by the end of 2024, we used GDP current prices in 2023 and GDP growth rates in 2024 sourced from the IMF. We used the GDP per capita figures for 2023 and the expected GDP growth rates for 2024 to calculate the estimated GDP for 2024 for each country. Next, we ranked the countries in ascending order of the GDP 2024.
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The Biggest Economy in the World by the End of 2024
1. United States
GDP (2023): $27.36 trillion
GDP Growth Rate (2024): 2.7%
GDP (2024): $28.096 trillion
The United States of America is expected to be the biggest economy in the world by the end of 2024. America had a GDP of $27.36 trillion in 2023, which is forecasted to grow at 2.7% in 2024 to reach $28.096 trillion by the end of the year. The country continues to perform above expectations despite high interest rates, struggling economies around the globe, and a drawdown from excess savings. The government policies have been efficient in bringing inflation closer to the 2% target for 2024. The strong growth of the US economy is backed by increased consumer spending in both the first and second quarters of 2024, an improved labor market delivering real income growth, and stable business and government spending.
Curious to learn about other economies that are going to grow at rapid rates? Check out our report on the 50 Biggest Economies in the World by the end of 2024.
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