California continues to hold its position as a global economic powerhouse, boasting the fourth-largest economy in the world based on the latest data. In the second quarter of 2025, the state’s economy generated goods and services at an impressive $4.215 trillion annual pace, leading the nation in economic output. These figures, released by the Bureau of Economic Analysis released Friday, Sept. 26, highlight the state’s economic vibrancy.
Gross Domestic Product (GDP), a key indicator of economic health, showed California’s economy growing at a robust 4.3% annual rate during the mid-year of 2025. This figure has become a point of pride, particularly when comparing California’s output to global GDP rankings provided by the International Monetary Fund.
The most recent IMF report, from April, placed the U.S. at the top with an estimated $30.5 trillion output for 2025, followed by China at $19.2 trillion and Germany at $4.7 trillion. If California were considered a sovereign nation, it would rank fourth globally, ahead of India ($4.187 trillion) and Japan ($4.186 trillion). The gap separating these three economies is remarkably narrow, just $29 billion. The upcoming release of new IMF numbers this autumn could potentially shift California’s standing in this global comparison.
A key question is whether India’s fast-growing economy will surpass California and Japan. The global economic landscape in 2025 is marked by considerable uncertainty. The White House’s alterations to international trade policies are a significant factor, introducing volatility. Fluctuations in U.S. tariffs on imports have created uncertainty, making economic forecasting particularly challenging.
While India’s economy experienced a strong 7.8% annualized GDP growth in the second quarter, the impact of currency exchange rates, specifically the depreciation of the rupee against the dollar, needs consideration. This may influence its global ranking. Experts and currency traders are closely watching India due to potential impacts from U.S. trade policies. These policies include tariffs of up to 50% on Indian exports to the U.S., as well as limitations on foreign workers, affecting India’s technology sector.
Japan’s economy, which grew at a 2.2% annual rate at mid-year 2025, continues to face challenges related to an aging population. However, a stronger yen against the U.S. dollar is expected to assist its 2025 ranking. Domestically, California is performing well compared to other states and the nation as a whole.
California’s 4.3% GDP growth after inflation for the second quarter placed it twelfth among the states, exceeding the nation’s 3.8% GDP expansion rate. Leading the nation in growth were North Dakota, Texas, Kansas, New Mexico, and Wyoming. The first quarter saw a flat GDP growth for California, though it still ranked sixteenth, against a backdrop of a 0.6% decline in national business output. The economy was adapting to the new administration’s business approach. For the entire year of 2024, California ranked twelfth in GDP growth, at 2.9%, surpassing the nation’s 2.4% expansion.