econintersect.com
       
  

FREE NEWSLETTER: Econintersect sends a nightly newsletter highlighting news events of the day, and providing a summary of new articles posted on the website. Econintersect will not sell or pass your email address to others per our privacy policy. You can cancel this subscription at any time by selecting the unsubscribing link in the footer of each email.



posted on 09 September 2017

Global Economic Power Is Shifting

Written by , Difference Group

BRIC economies continue to grow. In the late 2020s, the size of China’s economy will surpass that of the US. By the early 2030s, the BRICs’ combined economic power will surpass that of major advanced nations.

bric.logo


Please share this article - Go to very top of page, right hand side, for social media buttons.


The BRICS Summit in Xiamen, Fujian province, signals the rising might of the large emerging economies, such as China, India, Russia, and Brazil. South Africa does not fulfill the criteria of a true BRIC economy - large population, strong growth record and catch-up potential - but it has historically played a key role in African governance.

As global economic prospects now look brighter in the major advanced economies, some observers believe their recovery will weaken the role of the BRICS in global economy and governance. But the realities are quite different.

China the largest economy by the late 2020s

The four key BRIC economies are often compared with major advanced economies, or the so-called G6: the United States, Japan and the four core European nations: Germany, UK, France and Italy.

In 2000, China’s economy was barely a tenth of that of the US, whereas Japan’s GDP was still as large as the three largest European economies together: Germany, the UK and France. Brazil was struggling for stability, Russian economy had been crushed by US-led “reforms," while change was only beginning in India.

By the early 2010s, the world economy looked very different. The US economy was still more than twice as big as that of China but Japan’s growth had been penalized by stagnation. Chancellor Merkel’s Germany and President Sarkozy’s France ruled over Europe. In Brazil, the Lula era brought about a dramatic catch-up. In India, growth had accelerated. In Russia, President Putin’s rule had multiplied the size of the economy by almost six-fold.


By 2050, Chinese economy could be almost 50 percent bigger than its US counterpart, while the Indian economy may follow in the footprints and surpass America a few years later.


If China can stay on course, the size of its economy shall surpass that of the US by the late 2020s. Despite growth deceleration, which is normal after intensive industrialization, China has strong growth potential until the 2030s, whereas US growth is slowing by maturing economy and aging demographics.

Should President Trump succeed in the plan to cut immigration by 50 percent, US productivity and growth would deteriorate significantly more. In Europe, the net effect of anti-immigration sentiment is likely to generate similar adverse damage.

By 2050, Chinese economy could be almost 50 percent bigger than its US counterpart, while the Indian economy may follow in the footprints and surpass America a few years later. Japan and the core EU economies follow far behind (Figure 1).

In early 2030s, emerging economies will override G6

What will the catch-up by the BRIC economies mean in terms of global economic power? In 2000, the major advanced nations, as reflected by the G6, were almost ten times bigger than the the BRICs.

steinbock.2017.sep.10.fig.01

In the aftermath of the global crisis, their dominance had shrunk dramatically. In 2010, they were only three times as large as the BRICs.


In barely a decade and half - by the early 2030s - the BRICs collective economic power will surpass that of the G6.


In the coming decade, secular stagnation in the US, Western Europe and Japan will sustain relatively low growth, whereas large emerging economies, despite relative growth deceleration, will continue their historical catch-up.

In barely a decade and half - by the early 2030s - the BRICs collective economic power will surpass that of the G6. And by the mid-21st century, the BRICs could be some 50 percent bigger than their advanced counterparts (Figure 2).

steinbock.2017.sep.10.fig.02

In these scenarios, I have used publicly-available economic data by the International Monetary Fund (IMF) and projections based on history, industrialization and sustained growth potential.

However, even if something is possible does not mean that it will be actualized. Over time, both advanced and emerging economies must engage in structural reforms to realize their full potential.

Nevertheless, BRIC scenarios may not be optimistic enough because there are still other fairly large emerging economies that are likely to expand fast and significantly by 2050. Indonesia could become the fourth largest economy in the world, while Mexico and Turkey could grow bigger than Germany and France, respectively. Meanwhile, the economies of new rising powers - Saudi Arabia, Nigeria, Egypt, Pakistan, Iran, the Philippines and Vietnam - could each prove bigger than that of Italy.


BRIC scenarios may not be optimistic enough because there are still other fairly large emerging economies that are likely to expand fast and significantly by 2050.


Overall, large emerging nations are most likely to realize their potential if they can work together and intensify global trade and investment.


This article was adapted from a commentary originally released by China Daily on 06 September 2017.


>>>>> Scroll down to view and make comments <<<<<<

Click here for Historical Opinion Post Listing










Make a Comment

Econintersect wants your comments, data and opinion on the articles posted. You can also comment using Facebook directly using he comment block below.




Econintersect Opinion








search_box
Print this page or create a PDF file of this page
Print Friendly and PDF


The growing use of ad blocking software is creating a shortfall in covering our fixed expenses. Please consider a donation to Econintersect to allow continuing output of quality and balanced financial and economic news and analysis.







Keep up with economic news using our dynamic economic newspapers with the largest international coverage on the internet
Asia / Pacific
Europe
Middle East / Africa
Americas
USA Government





























 navigate econintersect.com

Blogs

Analysis Blog
News Blog
Investing Blog
Opinion Blog
Precious Metals Blog
Markets Blog
Video of the Day
Weather

Newspapers

Asia / Pacific
Europe
Middle East / Africa
Americas
USA Government
     

RSS Feeds / Social Media

Combined Econintersect Feed
Google+
Facebook
Twitter
Digg

Free Newsletter

Marketplace - Books & More

Economic Forecast

Content Contribution

Contact

About

  Top Economics Site

Investing.com Contributor TalkMarkets Contributor Finance Blogs Free PageRank Checker Active Search Results Google+

This Web Page by Steven Hansen ---- Copyright 2010 - 2017 Econintersect LLC - all rights reserved