Emerging economies to dwarf developed markets by 2050: PwC

LONDON - Emerging economies could be twice the size of developed markets by 2050, growing to make up almost 50 percent of world gross domestic product, said a Pricewaterhouse.

In a report yesterday — “The Long View: How will the global economic order change by 2050?” — PwC said it expects the seven emerging markets, known collectively as the E-7, to grow at an average rate of almost 3,5 percent over the next 34 years.

The E-7 is made up of Brazil, China, India, Indonesia, Mexico, Russia and Turkey. This group is set to account for about 50 percent of world GDP by 2050, compared with 37 percent now.

However, to realise this growth potential, the governments of emerging markets countries “need to implement structural reforms to improve macroeconomic stability, diversify their economies away from undue reliance on natural resources (where this is currently the case), and develop more efficient political and legal institutions,” the report said.

The E-7 country growth compares to a 1,6 percent average rate for the Group of Seven nations — Canada, France, Germany, Italy, Japan, UK and US. The G-7’s share of world GDP is forecast to fall to around 20 percent by 2050, from its current share of 31 percent.

The European Union’s remaining 27 member states are expected to account for 9 percent of global GDP by 2050, down from 15 percent in 2016.

The EU could be outpaced by UK growth once the transitional impact of the country’s decision to exit the European Union has passed, PwC said.

John Hawksworth, chief economist at PwC UK, highlighted in a foreword to the report the political upheaval of the past year.

“After a year of major political shocks with the Brexit vote and the election of President (Donald) Trump, it might seem brave to opine on economic prospects for 2017, let alone 2050.

“However, I still think it is important to take a longer-term view of global economic prospects that looks beyond the short-term ups and downs of the economic and political cycle, which are indeed very difficult to forecast.”

Mr Hawksworth added that taking a long-term view “is particularly useful for policymakers and businesses in areas like pensions, health care, energy and climate change, transport, housing and other types of infrastructure investment”. — Online.