We recently compiled a report on the 50 Largest Economies in the World in 2024 and in this article we will look at the largest economy in the world in 2024.
Global Economic Update
The global economy is facing a ‘see-saw’ kind of situation, facing political unrest that is impacting the global economy significantly. Rising tensions in the Middle East are creating havoc among global economies and if the war spreads across the region, it will have widespread economic impact worldwide. As of the July 2024 update, the IMF expects the global economic growth rate to be around 3.2% in 2024 and 3.3% in 2025. Services inflation is holding up progress on disinflation, which is creating a hurdle in monetary policy normalization.
The IMF pointed out in its July update that the US was experiencing signs of cooling. However, the drop in unemployment in the US reached near a three-year high of 4.3% in July, up from 4.15% in June. The fears of the labour market under pressure and the Fed still keeping the interest rates unchanged have impacted the stock market. Economists are pointing out that the economy is vulnerable to a recession, as things stand. Experts have mixed thoughts on an emergency rate cut before the next meeting in September. Economist and Wharton’s Professor Jeremy Siegel spoke to CNBC and said that the Fed is keeping the potential risk of recession in view and we might see an emergency rate cut if the data continues to go in the direction it is moving currently. However, Siege added that the Fed might not act at the moment and wait for the next meeting on September 31. Siegel anticipates the Fed to cut more than 0.25 basis points in September. Experts believe that making an emergency rate cut could signal more panic than stability and for stability, it is important that the Fed does not signal more panic.
Most important developments occurred in Asia, and the growth continues in India and China. The IMF has revised upwards for China with a 5% growth expected in 2024 and 4.5-4.6% growth anticipated in 2025. The Chinese economy is experiencing stronger consumption and stronger exports, which has led to revisions. Whereas, the Euro Area is expected to have a modest growth rate of 0.9% in 2024 and expected to increase to 1.5% in 2025.
What’s Happening in the Stock Market?
The panic among investors has led to wide sell-off around the global markets. Japan’s Nikkei saw the biggest drop in its history. On Monday, Japan’s stock market dropped by over 12%, recording the worst day for the index since the “Black Monday” of 1987. Things changed as the Bank of Japan announced an increase of around 0.25% in its key interest from a previous range of 0-0.1%.
The US stock market saw a huge sell-off with most of the companies in red. The tech giants dropped between 2% to 5% in a single trading session on Monday. The major development was the US labor market which experienced pressure as unemployment soared to 4.3%, reflecting a potential recession in the US. The S&P 500 fell 3%, its worst day since September 2022. The market crash has brought the index down 8.5% from an all-time high in July, but it still trades up 8.7% in 2024 overall.
Considering this market crash, it seems Warren Buffett’s Berkshire Hathaway was long expecting this to happen. Berkshire has been a seller of stocks for seven quarters straight, especially during Q2 2024, the company accelerated selling when it sold equities worth $75 billion. During the third quarter so far, Berkshire has sold the majority of its stake in Bank of America and Apple. Berkshire Hathaway now has record cash of $277 billion.
The economic growth of countries depends on two broad factors: one is population growth rate and the other is productivity growth rate which is a function of technological advancement or superiority. In this regard, the United States dominates the other countries. One such stock that’s contributing to the growth of the US is NVIDIA Corporation (NASDAQ:NVDA). The stock saw the highest drop in share price on Monday with shares dropping by 6.36%. NVIDIA Corporation (NASDAQ:NVDA) has been in the news for a while now and experts expect a lot from its AI projects going forward.
NVDA’s potential is based on its promises and its growing development in AI. Nvidia is the market leader in designing and selling Graphics Processing Units (GPU), with high demand due to its AI models. Some of the top customers of Nvidia include Amazon, Meta Platforms, Microsoft, and Alphabet, making up approximately 40% of its revenue. Tesla and OpenAI are also major customers of Nvidia. On July 31, Nvidia announced that Oracle is expanding its GPU-Accelerated Instances for AI. The new VM will expand Oracle Cloud Infrastructure’s (OCI) existing H100 portfolio, which includes an NVIDIA HGX H100 8-GPU bare-metal instance.
NVIDIA Corporation (NASDAQ:NVDA) has yet to justify its valuation, however, the company is improving its sales and increasing its cash. During Q1 2024, the company posted earnings per share of $0.61, up from an estimated EPS of $0.56. The revenue was reported around $26.04 billion, beating estimates by 6.04% and up by 262% year over year. Those investors who were worried about Nvidia’s valuation might have a chance to explore the stock during the current market crash. With a current price of $100.45, NVDA has an upside of almost 40% with a 90% ‘buy’ rating from 62 analysts.
Patient Capital Opportunity Equity Strategy stated the following regarding NVIDIA Corporation (NASDAQ:NVDA) in its Q2 2024 investor letter:
“NVIDIA Corporation (NASDAQ:NVDA) continued to lead both the market and the portfolio, remaining a top performer in the period gaining 36.7%. Nvidia is the market leader in designing and selling Graphics Processing Units (GPU), which has recently benefited from the insatiable demand for artificial intelligence (AI) models. The company currently captures a 92% market share of data center GPUs and grew revenue, earnings and free cash flow (“FCF”) an astounding 126%, 392%, and 610%, respectively, over the last year. While we expect competition to increase, we think NVDA can continue to maintain top market share. While many are concerned with backlog times shortening, we think the rollout of the B100, which promises 2.5x better performance for only 25% more cost, later this year will create more shortages.With leading-edge technology, an increasing innovation cycle and strong cash generation, the company is well positioned for the increased adoption of artificial intelligence (AI).”
Overall, NVIDIA Corp (NASDAQ:NVDA) ranks 3rd on Insider Monkey’s list titled Top 10 Latest AI Stock News and Analyst Ratings.
While we acknowledge the potential of NVIDIA Corp (NASDAQ:NVDA), there are cheaper opportunities in the market for investors looking to increase their exposure to AI. If you are looking for an AI stock that is more promising than NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
With that said, let’s take a look at the the largest economy in the world in 2024.
Our Methodology
We shortlisted the 50 countries with the largest economies in the world based on their GDP (PPP). The data for GDP (PPP) of all the countries was gathered from the IMF, as of 2024. The countries with the largest economies in the world in 2024 are ranked in ascending order of their GDP (PPP).
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here).
The Largest Economy in the World in 2024
China
GDP (2024): $35.29 Trillion
China has a GDP (PPP) of around $35.29 trillion, as of 2024. Although China is the largest economy in the world, it has been suffering from a property market crisis. Things have improved lately with stronger consumption and increasing exports, which has made the IMF revise the growth rate for the country. The IMF expects the Chinese economy to grow by 5% by 2024 and have a growth rate of 4.5-4.6% in 2025.
China is the largest exporting country in the world. The country has a GDP per capita of around $25,020 and has the second-largest population in the world, around 1.41 billion.
Curious to learn about other leading economies in the world? Check out our detailed report on the 50 Largest Economies in the World in 2024.
At Insider Monkey, we delve into a variety of topics, however, our expertise lies in identifying the top-performing stocks. Currently, Artificial Intelligence (AI) technology stands out as one of the most promising fields. If you are looking for an AI stock that is more promising than NVDA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published on Insider Monkey.