California economy now the world's fourth-largest, overtaking Japan

If California were its own country, its economy would now rank as the fourth-largest of any nation in the globe, Gov. Gavin Newsom said this week, a new milestone that comes at a time of major economic turbulence.

California has long been a global powerhouse, fueled by a variety of sectors including technology, agriculture, services and entertainment. The new ranking comes as the state is facing challenges from a trade war with China and other nations that are key California trading partners.

Newsom announced the state’s new economic ranking Wednesday after recently released data from the International Monetary Fund and the U.S. Bureau of Economic Analysis indicated that California’s nominal gross domestic product now exceeds Japan’s.

According to the data, California’s nominal GDP reached $4.1 trillion, surpassing Japan’s $4.02 trillion. That places the Golden State behind only the United States at $29.18 trillion, China at $18.74 trillion, and Germany at $4.65 trillion.

“California isn’t just keeping pace with the world — we’re setting the pace,” Newsom said in a statement. “Our economy is thriving because we invest in people, prioritize sustainability, and believe in the power of innovation.”

Of the top-four global economies, California’s is also the fastest growing, according to data and Newsom’s office. Its nominal GDP grew at a rate of 6% in 2024, outpacing the U.S.’s overall 5.3% rate, China’s 2.6% rate and Germany’s 2.9% rate.

Newsom attributed California’s showing to a growing population and record tourism spending coupled with a high concentration of venture capital and new business ventures. He also touted the strength of the state’s agricultural, high-tech and manufacturing centers.

Last week Newsom announced a lawsuit challenging Trump’s executive authority to enact international tariffs without the support of Congress, calling the president’s economic policies a “wrecking ball” to America’s global reputation.

The legal action argues that the International Emergency Economic Powers Act that Trump cited to impose tariffs does not grant the president the ability to unilaterally adopt tariffs on goods imported to the U.S.

Newsom’s office said California engaged in $675 billion in two-way trade last year, stands to lose billions in state revenue under Trump’s initial tariff policies. Some tariffs have since been relaxed.

“While we celebrate this success, we recognize that our progress is threatened by the reckless tariff policies of the current federal administration,” Newsom said in a statement this week on the new economic milestone. “California’s economy powers the nation, and it must be protected.”

The last time California advanced in world economic ratings was 2018, when its nominal GDP surpassed the United Kingdom’s to move into fifth place. India’s economy, which is currently $3.90 trillion, is predicted to overtake California’s in 2026, according to current data trends.

Times staff writer Taryn Luna contributed to this report.