Where will global GDP growth come from in next five years?
According to forecasts released earlier this month, the global economy is expected to achieve an annual GDP (gross domestic product) growth rate, as measured in constant dollars, of 3.7% between 2018-2020 before dipping to 3.6% between 2021-2023 and, in turn, pass the $100 trillion mark around 2022.
Bloomberg used International Monetary Fund projections, adjusted for purchasing power parities, to dissect where the growth will come from.
Even though China’s growth rate is expected to continue to slow, and in fact, is expected to grow at a slower pace than that of the US in 2040, according to longterm projections by the OECD (Organisation for Economic Co-operation and Development ), China will still be the top contributor to global GDP growth by a large margin in the near term. China’s share of global GDP growth is expected to rise from 27.2% to 28.4% by 2023.
The US, while still expected to contribute a sizable portion of global growth, will see its share shrink as the democratization of GDP growth spreads. Simply put, other countries will take a larger slice of the global GDP pie. The US share of global growth is expected to fall from 12.9% to 8.5% in 2023. Meanwhile, India’s grasp of the second largest share will become more clear. India’s share of global GDP growth is expected to rise from 13% to almost 16%—a jump of three percentage points. In the fourth spot will be Indonesia with an expected 3.7% share in 2023. The top five will be rounded out by Brazil.
The US isn’t the only major economy making room for new growth engines, most noticeably Iran, Turkey, Indonesia, and Bangladesh will gain.