A new report taks the 17 largest economies and adds in 13 emerging economies to create the ‘PwC 30’ grouping of countries accounts for around 85% of world economic output. Some of the highlighted projections of this analysis:
- By 2050, the E7 emerging economies will be around 50% larger than the current G7 (US, Japan, Germany, UK, France, Italy and Canada)
- China is expected to overtake the US as the largest economy around 2025
- India has the potential to nearly catch up with the US by 2050
- The projected list of fastest growing economies to 2050 is headed by Vietnam, and the top 10 includes Nigeria, Philippines, Egypt and Bangladesh
In the words of the report’s joint authors, John Hawksworth and Gordon Cookson: "The general message is that investors with long-time horizons should look beyond the BRICs — there are many other alternatives worth considering depending on the nature of the investment and the risk tolerance of the investor."
Projections to 2050
This report updates our long-term global economic growth projections, which were last published in January 2011. These are based on a PwC model that takes account of projected trends in demographics, capital investment, education levels and technological progress.
Chart 1 [see report] shows estimated relative GDP growth rates for the 24 economies in the study over the whole 2011-50 period. We can see that emerging economies tend to grow at 4% per annum or more, while advanced economies grow at around 2% or less – we will continue to live in a two-speed world economy for some decades to come as a catch up process continues.
However, even in 2050 average income per capita will still be significantly higher in the advanced economies than in the emerging economies – the current income gap is just too large to bridge fully over this period.
In contrast to recent arguments by Professor Robert Gordon and some other commentators, we do not expect a significant slowdown in the global pace of technical progress given the scope for further major advances in areas like ICT, biotechnology and nanotechnology, although emerging economies like China and India will play an increasing role in these developments in future decades. This will further fuel their catch-up process with the more sluggish advanced economies.
This is an extract from the report, The world in 2050, by John Hawksworth and Gordon Cookson, PwC, January 2013.