US GDP rises 6.3%, outpacing China's 4.6% to become world’s biggest economy
US Federal Reserve should start cutting interest rates soon, says Bill Gross In the beginning of 2023, the US was widely tipped to fall into a recession as the Federal Reserve jacked up interest rates to combat an inflation scourge not seen in decades. On the other hand, China was expected to experience a rip-roaring recovery as it reopened its economy fully to commerce after the Covid-19 lockdown. Mint Explainer | How China fumbled the bag with its economy post-Covid However, this week's GDP data showed that the US economy ended the year with a bang, growing 3.3% in real, inflation-adjusted terms in the fourth quarter after expanding 4.9% in the third.
China is struggling under the weight of a years-long real estate bust and its worst streak of deflation in some 25 years. Besides, country's exports — once a critical pillar of growth — declined in 2023, and unemployment among young people has soared. The local governments are also saddled with too much debt.
While Xi Jinping government claimed the economy expanded by 5.2% in 2023, there are suspicions that isn’t a true picture of what’s going on. To be sure, nominal GDP isn’t the only way to measure the size of a country’s economy. Why China's Population Decline Will Deepen Their Economic Woes Economists also use something called purchasing power parity, which tries to take account of differences in prices between countries for the same good or service.
On that basis, as calculated by Bloomberg Economics, China overtook the US around 2016. But many observers don’t think that’s the best way to measure economic heft on the world stage. For that, nominal GDP is seen as a better guide.
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