LOS ANGELES – California has dropped to the world’s fifth-largest economy, slipping from its previous spot at number four.
What we know:
California’s economy was producing goods and services at an annual rate of $4.215 trillion in the second quarter of 2025, according to the Bureau of Economic Analysis.
This represented a 5% increase in a year. However, new estimates from the International Monetary Fund show that Japan’s economy is now at $4.28 trillion, a 6.5% increase in a year, allowing it to reclaim the number four position.
The IMF’s updated stats also show other major economies: India at $4.125 trillion and the United Kingdom at $3.96 trillion. This creates a gap of about $300 billion between these three nations and California.
The backstory:
California first became the fifth-largest global economy in 2017 and then rose to fourth place last year, following a long decline in Japan’s economy. Japan’s recent jump is partly due to the strong performance of its currency, the yen, against the U.S. dollar in 2025.
The IMF report confirmed that the world’s top three economies remain unchanged:
United States at an estimated $30.6 trillionChina at $19.4 trillionGermany at $5 trillion
Why you should care:
The ranking of a state’s economy against those of other nations is often seen as a measure of its economic vitality. While California’s economy continues to grow, its recent slip in the rankings highlights the impact of global economic shifts and currency fluctuations on its standing.
It underscores the competitive nature of the global economy and shows that even small changes in a nation’s growth or currency can affect a region’s economic position.
The Source: This report is based on a comparison of recent economic data from two official sources: the International Monetary Fund and the U.S. Bureau of Economic Analysis. The GDP figures for nations are from the IMF’s 2025 estimates, while the state-level data for California is from the BEA’s second-quarter 2025 report.