Europe is a bunch of countries. I'm sure we can arbitrarily choose any other group of countries that will make it a bigger economy than Europe. So saying that Europe is the largest economy in the world is kind of silly. Largest to what? To other continents?
By "Europe", the parent means the E.U. The fact that is has a parliament, a supreme court, a set of laws and a unified trade policy means that it can (in some situations, such as this one) be compared with other federations of states. Such as... the USA!
