1EconomicsGlobal4 January 2011
With the rapid growth of the emerging markets, the global economy is experiencing a seismic shift. But why isthis change occurring? Will it continue? And how will the world look if it does? The answers to thesequestions are important for investors' decisions today.In this piece, we provide a framework for thinking about these issues. Based on our analysis of the Top 30economies ranked by size of GDP in 2050, our conclusions are as follows:
World output will treble, as growth accelerates on the back of the emerging economies. On average,annual world growth is projected to be accelerate towards 3% compared with growth of just over 2%in the 2000s (Chart 1). Emerging-world growth will contribute twice as much as the developed worldto global growth over this period.
By 2050, the emerging world will have increased five-fold and will be larger than the developedworld (Chart 2).
19 of the top 30 economies by GDP will be countries that we currently describe as ‘emerging’ (Table 3).
China and India will be the largest and third-largest economies in the world, respectively.
Substantial progress up the global league table will be made by a host of other emerging economies –most notably, Mexico, Turkey, Indonesia, Egypt, Malaysia, Thailand, Colombia and Venezuela.
These projections combine prospects for per capita GDP and the demographic outlook. Income percapita should grow in all the countries that we consider. But demographic patterns vary significantlyacross the world and have a major influence on growth prospects.
The US and UK, with better demographic outlooks, are relatively successful at maintaining their positions.
But the small-population, ageing, rich economies in Europe are the big losers. Switzerland and theNetherlands slip down the grid significantly, and Sweden, Belgium, Austria, Norway and Denmark drop out of our Top 30 altogether.
The world in 2050
19 of the 30 largest economies will be emerging economies
The emerging economies will collectively be bigger than thedeveloped economies
Global growth will accelerate thanks to the contribution from theemerging economies