Latest PwC report projects that for GDP measured at purchasing power parities (PPPs):
The long-term global economic power shift away from the established advanced economies is set to continue over the period to 2050, as emerging market countries continue to boost their share of world GDP in the long run despite recent mixed performance in some of these economies.
This is one of the key findings from the latest report from PwC economists on the theme of the World in 2050: The long view: how will the global economic order change by 2050? This presents projections of potential GDP growth up to 2050 for 32 of the largest economies in the world, which together account for around 85% of global GDP. These projections are based on the latest update of a detailed long-term global growth model first developed by PwC in 2006.
The report projects that the world economy could double in size by 2042, growing at an annual average real rate of around 2.5% between 2016 and 2050. This growth will be driven largely by emerging market and developing countries, with the E7 economies of Brazil, China, India, Indonesia, Mexico, Russia and Turkey growing at an annual average rate of around 3.5% over the next 34 years, compared to only around 1.6% for the advanced G7 nations of Canada, France, Germany, Italy, Japan, the UK and the US.
Indonesia is among the group of emerging market economies along with Brazil, China, India, Mexico, Russia and Turkey. Emerging markets will continue to be the growth engine of the global economy. By 2050, the E7 economies could have increased their share of world GDP from around 35% to nearly 50%. Based on GDP at PPPs, China is projected to be the largest economy in the world, followed by India and with Indonesia the fourth largest.
We will continue to see the shift in global economic power away from established advanced economies towards emerging economies in Asia and elsewhere. The E7 could comprise almost 50% of world GDP by 2050, while the G7’s share declines to only just over 20%
GDP PPP rankings | 2016 rankings | 2030 rankings | 2050 rankings | |||
Country | GDP at PPP | Country | Projected GDP at PPP | Country | Projected GDP at PPP | |
1 | China | 21269 | China | 38008 | China | 58499 |
2 | United States | 18562 | United States | 23475 | India | 44128 |
3 | India | 8721 | India | 19511 | United States | 34102 |
4 | Japan | 4932 | Japan | 5606 | Indonesia | 10502 |
5 | Germany | 3979 | Indonesia | 5424 | Brazil | 7540 |
6 | Russia | 3745 | Russia | 4736 | Russia | 7131 |
7 | Brazil | 3135 | Germany | 4707 | Mexico | 6863 |
8 | Indonesia | 3028 | Brazil | 4439 | Japan | 6779 |
9 | United Kingdom | 2788 | Mexico | 3661 | Germany | 6138 |
10 | France | 2737 | United Kingdom | 3638 | United Kingdom | 5369 |
11 | Mexico | 2307 | France | 3377 | Turkey | 5184 |
12 | Italy | 2221 | Turkey | 2996 | France | 4705 |
13 | South Korea | 1929 | Saudi Arabia | 2755 | Saudi Arabia | 4694 |
14 | Turkey | 1906 | South Korea | 2651 | Nigeria | 4348 |
15 | Saudi Arabia | 1731 | Italy | 2541 | Egypt | 4333 |
16 | Spain | 1690 | Iran | 2354 | Pakistan | 4236 |
17 | Canada | 1674 | Spain | 2159 | Iran | 3900 |
18 | Iran | 1459 | Canada | 2141 | South Korea | 3539 |
19 | Australia | 1189 | Egypt | 2049 | Philippines | 3334 |
20 | Thailand | 1161 | Pakistan | 1868 | Vietnam | 3176 |
21 | Egypt | 1105 | Nigeria | 1794 | Italy | 3115 |
22 | Nigeria | 1089 | Thailand | 1732 | Canada | 3100 |
23 | Poland | 1052 | Australia | 1663 | Bangladesh | 3064 |
24 | Pakistan | 988 | Philippines | 1615 | Malaysia | 2815 |
25 | Argentina | 879 | Malaysia | 1506 | Thailand | 2782 |
26 | Netherlands | 866 | Poland | 1505 | Spain | 2732 |
27 | Malaysia | 864 | Argentina | 1342 | South Africa | 2570 |
28 | Philippines | 802 | Bangladesh | 1324 | Australia | 2564 |
29 | South Africa | 736 | Vietnam | 1303 | Argentina | 2365 |
30 | Colombia | 690 | South Africa | 1148 | Poland | 2103 |
31 | Bangladesh | 628 | Colombia | 1111 | Colombia | 2074 |
32 | Vietnam | 595 | Netherlands | 1080 | Netherlands | 1496 |
Sources: IMF for 2016 estimates (with an update for Turkey), PwC projections for 2030 and 2050
When looking at GDP measured at market exchange rates (MER), there is not quite such a radical shift in global economic power. But China still emerges as the largest economy in the world before 2030 and India is still clearly the third largest in the world by 2050.
But the spotlight will certainly be on the newer emerging markets as they take centre stage. By 2050, Indonesia and Mexico are projected to be larger than Japan, Germany, the UK or France, while Turkey could overtake Italy. In terms of growth, Vietnam, India and Bangladesh could be the fastest growing economies over the period to 2050, averaging growth of around 5% per year as illustrated in Figure 1, which also shows how growth breaks down between population and GDP per capita.
Source: PwC analysis based on UN population projections
Growth in many emerging economies will be supported by relatively fast-growing populations, boosting domestic demand and the size of the workforce. This will need, however, to be complemented with investments in education and improvement in macroeconomic fundamentals to ensure there are sufficient jobs for the growing number of young people in these countries.
Nigeria has the potential to move eight places up the GDP rankings to 14th by 2050, but it will only realise this potential if it can diversify its economy away from oil and strengthen its institutions and infrastructure.
Colombia and Poland also exhibit great potential, and are projected to be the fastest growing large economies in their respective regions, Latin America and the EU (though Turkey is projected to grow faster if we consider a wider definition of Europe).
One bit of good news for today’s advanced economies is that they will continue to have higher average incomes – with the possible exception of Italy, all of the G7 continue to sit above the E7 in the rankings of GDP per capita in 2050. Emerging markets are projected close the income gap gradually over time, but full convergence of income levels across the world is likely to take until well beyond 2050.
China achieves a middling average income level by 2050 (see Map 1), while India remains in the lower half of the income range given its starting point, despite relative high projected growth over time. This illustrates that while strong population growth can be a key driver of total GDP growth , it will take much longer to eliminate differences in average income levels.
Map 1: Projected real GDP per capita in 2050
Notes:
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