BY Richard Summerfield
As 2016 demonstrated, we live in changeable, unpredictable times. Regardless, PwC has offered a bold forecast for the state of the global economic order. In a report released this week, 'The World in 2050', PwC sets out its long-term global growth projections to 2050 for 32 of the largest economies in the world. Those countries account for around 85 percent of world’s GDP.
According to PwC, the global economy could more than double in size. It forecasts cumulative global GDP growth of 130 percent between 2016 and 2050. Much of this growth will be seen in emerging markets, which could grow at twice the speed of developed nations and see their of global GDP rise from around 35 percent to around 50 percent by 2050.
China will most likely be the largest economy in the world, accounting for around 20 percent of world GDP in 2050. In total, six of the seven largest global economies will be found in the emerging markets. Mexico and Indonesia could emerge as significant forces in the coming decades. In order for emerging markets to realise their long-term growth potential, they will need to enhance their institutions and infrastructure. Greater investment in education, infrastructure and technology is necessary. Diversifying their economies will also help with sustainable growth.
By contrast, developed markets such as the US will not fare as well. The US could be down to third place in the global GDP rankings behind China and India. The EU27’s share of world GDP could fall below 10 percent by 2050. The UK could drop to 10th place.
But these various levels of economic growth are dependent on political and economic policy decisions. As John Hawksworth, chief economist at PwC UK, notes, “a populist backlash against globalisation, automation and the perceived impact of these trends in increasing income inequality and weakening social cohesion” will pose a genuine threat to growth, both in the developed and developing worlds.
He continues: “There is no silver bullet to address these concerns. They require determined efforts by governments to boost the quality of education and training, and address perceived unfairness through well targeted fiscal policies. They also require real political leadership to resist calls for increased protectionism and maintain momentum on longer term issues like climate change and global poverty reduction.”
Report: The World in 2050