Standard Chartered’s initial report into the global super-cycle, published in November 2010, explained how the world economy is now experiencing its third super-cycle, a period of strong growth lasting a generation or more and aimed to put some context around the considerable uncertainties and risks facing the global economy. However, just as importantly, the report stressed the importance of recognising the upside opportunities now being witnessed by the shift in the balance of economic and financial power from the West to the East.
For India, the policy framework will be particularly important as it seeks to overcome its regulatory burden and address its infrastructure needs. The initial focus is on its hard infrastructure, such as its transport system but its soft infrastructure is also key, with the need to see continued improvement in education and skills. India’s population is rising. Over the next twenty years the working-age population should increase by over 200 million and with half of the total population under twenty-five, India has a demographic dividend, but only if it delivers the policies and economic growth needed
The key drivers of the super-cycle will be increased trade, especially among emerging markets, rapid industrialisation, urbanisation and booming middle classes in the developing world. The number of people living in the cities will grow to 5bn in 2030, up from 3.4bn today.
Asia will drive most of the global growth over the next 20 years, during which global output is conservatively set to more than double in real terms, having already risen more than 50 per cent in the last decade. Living standards, as measured by real per capita income, will have increased nine-fold in China and India between 2000 and 2030. Rising personal incomes will push billions of people into the middle classes and drive consumption which will spur domestic economic growth. China is likely to grow at a 6.9 per cent rate over the next two decades and overtake the US to become the world’s economic superpower within a decade. Meanwhile, India is likely to grow at an average 9.3 per cent pace over the same period and tail the US as the third largest economy by 2030, the report forecasts.
By 2030, over 6 billion of the total population of 8.5 billion will be considered middle class or wealthier ($10-100 per day or better) and those people will be urbanized as well.