India will overtake the United States as the world’s second-largest economy by 2050 according to a newly published report.
Experts at PricewaterhouseCoopers (PwC) claimed emerging economies such as India, China, Brazil and Russia will boom at the expense of the advanced G7 nations such as the United States, Britain, France and Germany.
The report, ‘The long view: how will the global economic order change by 2050?’, compares 32 countries by ranking their GDP and Purchasing Power Parity, which assesses the standard of living in each country and what people can buy on an average wage.
Experts claimed the world’s economy could double in size by 2042.
According to PwC: ‘China has already overtaken the US to be largest economy based on GDP in PPP terms, and could be the largest valued at market exchange rates before 2030.
‘India could overtake the US by 2050 to go into 2nd place and Indonesia could move into 4th place by 2050, overtaking advanced economies like Japan and Germany.
‘By 2050, six of the seven largest economies in the world could be emerging markets.’
Russia will be the largest economy in Europe by 2050 according to the report.
Researchers believe Vietnam could be the world’s fastest growing economy in the period until 2050, pushing it to 20th in the world.
The UK could improve its standing in the world if it continues to allow in talented migrants and remain open to trade following Brexit.
In Europe, Turkey could overtake Italy by 2030 depending on the future political direction of the country under President Erdogan.
Many countries, according to the authors of the report, are being held back by corruption or what is euphemistically called ‘governance standards’.
Nigeria and Colombia are seen to have potential.
Poland is set to be the fastest growing country in the EU.
John Hawksworth, PwC’s chief economist and co-author of the report said: ‘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 per cent of world GDP by 2050, while the G7’s share declines to only just over 20 per cent.’
Researchers claim Vietnam, India and Bangladesh could see growth rates averaging around five per cent per year for the next three decades.
Hawksworth added: ‘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.’
Workers in developed countries are likely to have higher average incomes, unless they live in Italy which facing long-term economic decline.
Wage levels in emerging countries will improve but they will not reach advanced country levels until well after 2050.
Hawksworth said: ‘Average income gaps between countries will reduce over time, but this process will still be far from complete by 2050. In 2016, US GDP per capita was almost four times that of China’s and almost nine times that of India’s.
‘By 2050, these gaps are projected to narrow so that average US income levels may be around double China’s and around three times India’s – but it is also possible that income inequality within countries will continue to rise, driven in particular by technological change that favours higher skilled workers and the owners of capital.’
PwC said trade between emerging nations and established economies will benefit both sides.
Hawksworth added: ‘Businesses need to be patient enough to ride out the short-term economic and political storms that will inevitably occur from time to time in these emerging markets as they move towards maturity.
“But the numbers in our report make clear that failure to engage with these emerging markets means missing out on the bulk of the economic growth we expect to see in the world economy between now and 2050.”
