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The United States has been the global economic powerhouse for decades. It has had a significant lead over other economies, but China is rapidly closing the gap with the US. Even though China’s growth rate has slowed in recent years, economists predict its economy will surpass the US in the next few years. Other developed nations such as Germany, Japan, France, Italy, and Canada will be overtaken by emerging economies over the next few years. Let’s take a look at the top 10 largest economies by 2050.
The dynamics of the world economy are changing rapidly. Some countries will get richer by 2050 while others will find themselves in a financial mess. The world will be a lot different in 2050 than it is now. Accountancy firm PricewaterhouseCoopers (PwC) tried to rank 32 of the world’s largest economies in the year 2050 based on GDP at Purchasing Power Parity (PPP), which reflects a country’s economic productivity and standards of living.
The report is titled The long view: how will the global economic order change by 2050? Many of the currently leading economies will slip down the rankings. PwC says the world economy will more than double in size by 2050 “due to continued technology-driven productivity improvements.” The firm expects emerging markets to grow twice as fast as advanced economies on average.
The UK is currently the world’s fifth largest economy, but it will slip down to 10th place in the next 32 years. It will still be doing much better than France, which is estimated to slip down to 12th place. The PwC expects Brexit to affect the UK economy in the short-term but remains bullish over the long run, thanks to its steady economic growth and growing working population.
Currently, Germany is the fourth largest economy only behind the US, China, and Japan. It will slip down to 9th place as emerging countries such as India, Indonesia, and Brazil overtake it. The country’s economic growth is expected to slow down in the coming decades as the working-age population declines. The massive influx of immigrants in the last few years is not going to help much.
Just a few decades ago, economists thought Japan was going to overtake the United States. Japan remains a technological and economic powerhouse but the declining working-age population has hampered its economic growth. In fact, PwC predicts Japan will witness the slowest growth of all the 32 largest economies through 2050. Its population is also expected to decline 0.5% per year on average. Maybe the Japanese government would offer its people incentives to have more children.
Mexico will continue to grow at a healthy rate over the next 3-4 decades to become one of the world’s top 10 largest economies. The current Mexican government has launched a series of economic reforms to strengthen the country’s economy. President Donald Trump’s wall is unlikely to hamper Mexico’s economic progress.
Russia has a powerful military but its economy currently doesn’t rank in the top 10. PwC predicts Moscow will continue to make progress and become the 6th largest economy by 2050. Russia already has the institutions, infrastructure, leadership, and natural resources to support its growth in the long run. However, the country’s declining population could hold it back.
The Brazilian economy is not going to witness the same pace of growth as India, Indonesia, or Mexico. But it will continue to grow steadily and become the 5th largest economy by 2050 from the current 9th spot. Despite a higher GDP, its per capita income is expected to decline slightly in the coming years as the population continues to go up. The country has struggled with high inflation rates in the past.
Indonesia will see explosive growth in the coming years – pushing developed nations such as the UK, Germany, and Japan out of the top five. The Southeast Asian nation has managed to dramatically reduce poverty and unemployment in the last few decades. Its population is expected to balloon from the current 240 million to 321 million by 2050.
The United States is currently the world’s largest economy, with China close behind. In about 32 years, it will slip down to third place. Its relatively slow GDP and population growth means it won’t be able to keep up with populous countries such as China and India. The country has a well-developed infrastructure, technological prowess, and education system to support its growth.
India is currently the world’s second most populous country and 7th largest economy. By 2050, its population is expected to rise to 1.6 billion people and its GDP based on PPP is projected to reach $44.128 trillion. According to PwC, India will have the highest GDP growth rate in dollar terms over the next three decades, thanks to the growing working-age population, improving infrastructure, and manufacturing.
By 2050, China will not only have overtaken the US but its economy will be much, much bigger than the US. According to the PwC report, its GDP will stand at around $58.5 trillion compared to the US’ $34.1 trillion. The Asian giant will account for 20% of the world’s economy, higher than India at 15% and the US at 12%. It will have an aging population and it won’t be able to enjoy the same pace of growth as it has in the last four decades. Even though China and India will get bigger than the US by 2050, their per capita GDP will still be lower than the US due to higher population.
PwC’s predictions are interesting. But a country won’t be able to achieve economic success without strong institutions and well-developed infrastructure. Many emerging countries still don’t have the institutions and infrastructure needed to realize their long-term growth potential. It’s worth pointing out that 2050 is still far away. Whether these predictions materialize will depend on a variety of factors.