‘Long-term macroeconomic forecasts: key trends to 2050,’ is a new report from The Economist Intelligence Unit (The EIU). It examines some of the big economic issues that will shape global business around the world in the coming decades. The research is based on The EIU’s long-range forecasts for 82 countries out to 2050. Findings from the report include that:
In 2050 the top three economies (China, US, India) will each be richer than the next five put together
By 2050 Asia will account for 53% of global GDP
During the period between 2015-50, the growth rate of the global working-age population will drop from 1.7% to 0.3%.
US GDP annual average real growth 2015-2030 2.3%
US GDP annual average real growth 2031-2050 1.8%
Canada GDP annual average real growth 2015-2030 2.2%
Canada GDP annual average real growth 2031-2050 2.2%
China GDP annual average real growth 2015-2030 4.7%
China GDP annual average real growth 2031-2050 2.2%
China will be a true global superpower by 2050. Despite slowing economic growth, it will be comfortably the world’s largest economy by that time, roughly 2.5 times the size of that of the US. Even in per capita terms, incomes in China will be approaching those recorded in developed nations. However, getting to this stage will require changes in China’s domestic political system. Conflicting demands from different parts of society will require the CCP to relax its control in the coming decades. A failure to do this would probably result in a period of economically destabilising political upheaval. It would also complicate China’s rise on the international stage, placing dangerous strains on its relations with the US.
India GDP annual average real growth 2015-2030 6.4%
India GDP annual average real growth 2031-2050 7.4%
India’s long-term economic performance is predicated on changes in the best- and worst-performing sectors: the fast-growing information technology industry will need to move up the value-added chain, while the agricultural sector, which employs nearly 50% of the population, will need investment in order to reduce its reliance on monsoons. Better storage facilities for food grains and perishables, and an improved supply-chain could curb consumer price inflation and improve the long-term outlook.
Indonesia GDP annual average real growth 2015-2030 5.1%
Indonesia GDP annual average real growth 2031-2050 3.6%
The top ten economies in 2050 based on the EIU long range forecasts is below. The EIU forecast chart to 2050 does not match the text of the China EIU forecast page. The China forecast says by 2050 China’s economy will by 2.5 times the size of the USA. The table below shows 1.5 times the size of the USA.
The methodology used to derive the EIU long term-forecasts is distinct from that used to generate the EIU five-year (medium-term) forecasts. Medium-term forecasts are based on a “demand-side” forecasting framework, which assumes that supply adjusts to meet demand either directly through changes in output or through the drawing-down (or building-up) of inventories. Such a framework is appropriate for constructing short- and medium-term projections, where output can deviate substantially (but temporarily) from its long-run sustainable level. But a demand-side framework is not appropriate for forecasting over the long term. Instead, we utilise a supply-side framework, in which output is determined by the availability of labour and capital equipment and the growth in
SOURCE – Economist Intelligence Unit