By Rob Starr, Content Manager, Big4.com
According to the PwC new World in 2050 report titled “The BRICs and Beyond: Prospects, challenges and opportunities”, the global financial crisis has accelerated the shift of the economic centre of gravity, with China, the US and India set to be the world’s three biggest economies by 2050. According to the report, emerging economies will grow much faster than the G7 over the next four decades, providing they can overcome major challenges presently hindering their growth.
Comparisons of average growth in GDP in terms of purchasing power parity (PPP), show Nigeria will lead the way from 2012 to 2050, followed by Vietnam, India, Indonesia, Malaysia, China, Saudi Arabia and South Africa.
But the PwC report highlights a number of political and macroeconomic risks that could derail their growth, including:
- Social tensions driven by rising income inequality in China and other fast-growing economies
- High fiscal deficits in India and Brazil
- Over-reliance on oil and gas revenues in Russia and Nigeria
- Macroeconomic and financial instability in Vietnam
PwC Australia partner and economist Jeremy Thorpe said, “Population growth is a key characteristic of the top 20 economies in 2050 -you can’t fight demographics and the urbanisation of a population.”
“But big is not always better, you need to look at other criteria such as how advanced is an economy. While in absolute terms Australia will be less important, our standard of living will still far exceed those of India and China.”