“Emerging economies such as Mexico and Indonesia are likely to be larger than the UK and France,” says the report, “while Pakistan and Egypt could overtake Italy and Canada”. India, for example, is expected to surpass the US as the second-largest economy, news outlets reported.
Last year, Canada’s economy ranked 17th, and is projected to rank 22nd by 2050. Pakistan, ranked 24th, is projected to move up to the number 16 spot, while Egypt, at number 21, is projected to move to 15.
These rankings are based on GDP at purchasing power parity, which measures the volume of goods and services produced in an economy, accor5ding to Financial Tribune.
Overall, the world economy could more than double in size by 2050, far outstripping population growth, due to technology-driven improvements. However, emerging market economies must enhance their institutions and infrastructure significantly if they’re to realize this growth potential, warns PwC.
Challenges for policymakers include avoiding protectionism, sharing the benefits of globalization equally across society and developing green technologies to ensure environmentally sustainable growth.
For businesses, maturing emerging markets will become less attractive as low-cost manufacturing bases, but more attractive as consumer and business-to-business markets, predicts PwC. And, since emerging markets can be volatile, international investors must be patient enough to ride out short-term economic and political cycles in these countries.
Asia Will Surpass EU
“Growth is expected to 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 3.5% over the next 34 years, compared to an average of just 1.6% for the advanced G7 nations of the US, Canada, France, Germany, Italy, the UK and Japan,” Business Insider quoted the report as saying.
The European Union’s share of the global economy could shrink to less than 10% by 2050, while Asia comes to dominate, according to the report. Currently, the EU economy accounts for 15% of GDP, but that figure could diminish to just 9% by 2050, according the report.
Germany’s position is expected to slip from fifth to eighth in ranking of economies based on size, between now and 2030, and drop to ninth by 2050. France—currently the world’s 10th biggest economy—will drop to 13th over the same period. The ranking is based on measure of purchasing power.
For the eurozone’s third-largest economy, Italy, the picture is even more concerning. The country currently ranks 12th when it comes to global GDP. However, it could potentially slump to as low as 21st by the time 2050 comes around.
“Ireland has a great opportunity to shift the focus of its exports towards faster-growing economies like China and India, as well as being an attractive gateway to Europe in a post-Brexit world, particularly for financial services operations looking to benefit from EU passporting rights.”
Indeed, emerging markets are set to have a significantly larger influence over the coming decades, with both Indonesia and Mexico expected to move into the top seven.
Vietnam could be the world’s fastest-growing economy over the period and could overtake both Canada and Italy.
Based on the purchasing power parity measure used by PwC, Russia currently ranks as the sixth-largest economy and the forecasters reckons that position will remain unchanged between now and 2050. Brazil could rise from seventh to fifth over the period.
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.
From an African perspective, the report finds that Nigeria could move up eight places by 2050 to 14th, but only if the country can diversify and improve governance standards.
The authors project global economic growth to average around 3.5% per annum over the years to 2020, slowing down to around 2.7% in the 2020s, 2.5% in the 2030s, and 2.4% in the 2040s, following “a marked decline in the working age populations.”
They added that global GDP could be equivalent to 130% of the current rate by 2050.