The world economy or global economy deals with the global areas of production, distribution and trade. It also deals with world’s consumption of goods and services. World economy is strongly influenced by the societal factors such as culture, beliefs, wellness, education, technology, social structure, politics, legislation and availability of both human and natural resources. In the simplest terms, world economy is defined as the balance between demand and supply of commodities and basic services.
The world economy is made up of global system of economic interactions primarily driven by autonomous regions and nation states. Their economic activities which include production, consumption, economic management, work in general, exchange of financial values and trade of goods and services are either conducted nationally or across borders with other countries.
The world economy is the aggregation of the economic measurements of the global economic regions and nations.
The world economy is usually measured in its monetary terms equivalent. Starting from the 70’s when the United States currency was adopted as the sole currency for crude oil transactions, the US Dollar (usually termed the Petrodollar) has become the major currency by which world economy is driven, through trade.
One of the strongest metric used in measuring the strength or weakness of a nation’s economy is the Gross Domestic Production (GDP). GDP is the measure of the total national production in goods and services within a given period. Another metric is Gross National Income (GNI). In 2023, the top five (5) strongest economies in the world are United States, China, Japan, Germany, United Kingdom and France. Due to the effect major critical global effects such as Covid19 pandemic, Russian Ukrainian War etc.