California's economy surpasses UK's to become world's fifth biggest

| Updated: May 08, 2018 14:01:36

California's economy surpasses UK's to become world's fifth biggest

California’s economy has surpassed that of the United Kingdom to become the world’s fifth largest, according to new federal data made public on Friday.

Despite having a population of only 40 million compared with the UK’s 65 million people, California’s gross domestic product of $2.7 trillion has overtaken the UK’s $2.6 trillion, The Guardian.

The so-called Golden State’s GDP rose by $127 billion in the period from 2016 to 2017, while the UK’s economic output fell slightly over that time when measured in US dollars, due in part to exchange rate fluctuations.

British GDP has fallen steadily from $3tn in 2014, according to World Bank figures.

The release of Friday’s data demonstrated the sheer immensity of California’s economy, home to a thriving technology sector in Silicon Valley, the world’s entertainment capital in Hollywood and America’s “salad bowl” in its agricultural heartland.

It also reflects a substantial turnaround since the recession that followed the financial crisis of 2008.

California’s economic output is now surpassed only by the total GDP of the United States, China, Japan and Germany.

All economic sectors except agriculture contributed to California’s higher GDP, said Irena Asmundson, chief economist at the California department of finance.

Financial services and real estate led the way, with $26 billion in growth, followed by the information sector, which includes many technology companies, at $20 billion. Manufacturing was up $10 billion.

California last had the world’s fifth largest economy in 2002 but fell as low as 10th in 2012 following the great recession.

Since then, the largest US state has added 2 million jobs and grown its GDP by $700 billion, now contributing a little over 14 per cent of the US economy despite having 12 per cent of the US population, according to state economists.

California’s strong economic performance relative to other industrialized economies is driven by worker productivity, said Lee Ohanian, an economics professor at University of California, Los Angeles.

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