California breaks into global top 4 economies, beats Japan

Silicon Valley continues to fuel California’s economic growth with its tech giants and vibrant venture capital scene, while the state's leadership in agriculture adds vital diversity to its economic foundation

California has officially surpassed Japan to claim the title of the world’s fourth-largest economy, according to newly released data from the International Monetary Fund (IMF) and the U.S. Bureau of Economic Analysis. The state’s nominal GDP reached $4.1 trillion in 2024, edging past Japan’s $4.02 trillion and trailing only the United States, China, and Germany on the global stage.

Governor Gavin Newsom welcomed the milestone as a reflection of California’s commitment to innovation, sustainability, and inclusive growth. “California isn’t just competing globally—we’re leading,” Newsom said. “We’ve built an economy that invests in people and ideas, pushing boundaries and driving progress.”

The state has seen steady economic expansion in recent years, recording an average nominal GDP growth rate of 7.5% between 2021 and 2024. In 2024 alone, growth stood at a robust 6%. California continues to lead the nation in sectors such as technology, clean energy, manufacturing, and agriculture. With more than 36,000 manufacturing units employing over 1.1 million people, it ranks as the top state in industrial output.

Silicon Valley remains a key driver of this growth, home to major tech giants and a thriving venture capital ecosystem. At the same time, California leads in agricultural production, helping to diversify its economic base.

Trade tensions cloud economic gains

Despite the strong economic performance, tensions with the federal government remain. Earlier this month, the state filed a lawsuit challenging the continued use of emergency powers to enforce tariffs introduced during the Trump administration. According to state officials, the tariffs have disrupted trade flows, increased costs for businesses, and could impose up to $170 billion in import taxes on California by 2025 if left unchanged.

“Trade barriers like these hurt our economy and threaten the very progress we’re celebrating,” Newsom’s office stated.

Meanwhile, India holds firm as the world’s fifth-largest economy with a nominal GDP of $4.27 trillion, and is projected to grow at 6.8% in the 2024–25 fiscal year, driven by domestic demand and demographic dividends.

As California moves up the ranks of the world economy, state leaders are emphasizing the need to protect innovation-friendly policies, invest in infrastructure, and resolve trade disputes that could hinder future growth. The state’s vision remains rooted in forward-looking development, with a focus on equity, sustainability, and global competitiveness.