Shift in global economic power

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Shift in global economic power

Silas Yang

By Silas Yang,
PwC China senior partner

In the past few years, the global balance of economic power has been shifting from developed to developing countries. As this trend continues, it will have an increasing impact on where growth opportunities arise for companies – and on where they invest to capitalise on those opportunities.

Shift in global economic power

The next decade will see this long-term economic rebalancing reach a tipping point, as emerging markets expand their global reach and influence still further. In 2009, the total gross domestic product (GDP) of the E7 – the world’s seven leading emerging nations – was about two-thirds that of the G7, their developed counterparts. By 2050 these positions will be reversed, with the E7’s aggregate GDP rising to almost double that of the G7.

This reshaping of the world economic order is unprecedented in its speed and scale. And it will trigger an equally dramatic realignment of global business activity and spending power, affecting not just GDP but also other measures such as population, water supplies and trade.

This realignment will see the world’s growth economies make the transition from centres of labour and production to consumer-oriented societies. And as they become exporters of capital, talent and innovation, they’ll also shift the prevailing direction of global trade and investment – with the long-standing north-south axis swinging to south-south.