HSBC had a 42 page report that had their view of the world in 2050 The report identifies the Top 100 economies by size.
The ranking is based on an economy’s current level of development and the factors that will determine whether it has the potential to catch up with more developed nations. These fundamentals include current income per capita, rule of law, democracy, education levels and demographic change, allowing us to project forward GDP to 2050. We assume that policymakers will continue to make progress in addressing economic flaws and that they avoid wars and remain open to global trade and capital. Of course, some of our bold assumptions may not turn out to be accurate.
They highlight the following:
* The striking rise of the Philippines, which is set to become the world’s sixteenth-largest economy, up 27 places from today.
* Peru could sustain average growth of 5.5% for four decades and jump 20 places to twenty-sixth. Chile is another star performer in Latin America.
* Massive demographic change: in 2050 there will be almost as many people in Nigeria as in the United States, and Ethiopia will have twice as many people as projected in the UK or Germany. The population of many African countries will double
The Japanese working population looks set to contract by 37% and the Russian one by 31%. The eurozone faces similar problems with working population declines of 29% in Germany, 24% in Portugal, 23% in Italy and 11% in Spain, adding a whole new perspective to the sovereign debt crisis.
Fast growth – over 5% average growth to 2050
Growth is 3 to 5% average growth to 2050
Stable is less than 3% average growth to 2050
To get to their base case projections, they consider two scenarios. The first assumes the ‘economic infrastructure’ is fixed at that evident today. But to constrain these economies on the assumption they will not make any further improvements would be unfair. For example, there is a clear trend that education standards across the emerging world are improving.
They then consider a second scenario, in which they assume that over the next 40 years, all economies reach the ‘optimal’ economic infrastructure. This is the highest possible level of achievement from any of the countries in our sample.
The results of these two scenarios are shown in the Appendix. Their base-case scenario sits between these two options. Essentially, each country gets halfway to eliminating its imperfections.
This exercise is a starting point for considering the long-term outlook and should not be taken as our explicit forecast. Their regional economists will be able to provide more accurate near-term forecasts, taking into account factors the model is unable to capture and cyclical considerations.
China’s income per capita is currently just 7% that of the US. Adding up the annual projections shown in Table 16, we project China’s income per capita to grow by more than 800% between now and 2050. This might seem an astonishing number. But keep in mind this base effect. Despite this rapid growth, in 2050, China’s income per capita is still just 32% that of the US. We are only capturing part of China’s development story here and the likelihood is that these numbers turn out to be too conservative, rather than too optimistic. The same is true of the Philippines, which looks set for a multi-decade run of strong growth.
But being ‘poor’ is not enough to guarantee growth in income per capita. The projections for Pakistan demonstrate this. Because of low scores for schooling, life expectancy, rule of law and democracy, Pakistan has little potential for income
per capita to grow near term, despite a low starting point. But given we assume governments will make progress on some of these flaws, so growth will start to pick up in countries such as Pakistan and Bangladesh.