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Johannesburg - By 2050 the global economy will be very different from what it is today.
Some economies of the biggest seven emerging countries (China, India, Brazil, Russia, Indonesia, Mexico and Turkey – the E7), as well as South Africa, Nigeria, Argentina, Saudi Arabia and Vietnam will by that time be bigger than those of the G7 (the US, Japan, Germany, Britain, France, Italy and Canada).
During this process Nigeria and Vietnam will replace South Africa and Australia’s positions on the list of the 20 biggest economies in the world simply because their economies will show faster growth. And, contrary to general expectation, over the next four decades the strongest economic growth is expected in India and not in China.
According to PwC’s The World in 2050 report, the financial crisis has been the major cause of the shift of power to the E7.
From an analysis of global economies’ growing gross domestic product (GDP) to 2050 it would appear that the E7 will bypass the G7 before 2020 if GDP is measured in terms of purchasing power parity (PPP).
PPP provides for price differences between the various countries, and in terms of PPP the Chinese economy will be bigger than that of the US by 2018.
If GDP is calculated on market exchange rate (MER), the shift in economic power will take longer but is still inevitable, said PwC.
According to the PwC forecast, by 2050 the E7 economies will be 64% larger than those of the current G7, if measured in terms of MER. The E7 economies are currently only 36% the size of those of the G7.
If PPP is used, by 2050 the E7 will be twice the size of the current G7, compared to its present 72%.
E7 growth will be driven by the growth in China and India. China’s economic growth is expected to slow down as a result of the past 30 years’ policy of one child per family. The workforce has consequently become older and the number of consumers has shrunk.
Nevertheless China’s economy, measured in terms of PPP, will bypass that of the US before 2020.
By 2050 the Chinese and Indian economies will exceed those of the US, and Britain will barely hold onto its position as one of the ten major world economies.
By that time Brazil will be the fourth-biggest economy, followed by Japan, Russia, Mexico, Indonesia and Germany.
- Sake24
