The World in 2050

In a forecast of “The World in 2050”, PricewaterhouseCoopers (“PWC”) suggests growth of the world economy will average just over 3% per annum up to 2050. This is after accounting for a showdown in global growth after 2020 due to moderation of expansion in emerging economies and ageing population in more developed economies. But not accounting for “trade” wars.

In terms of purchasing power parity (“PPP”), China has overtaken the U.S. while India (in PPP terms) will become the second largest economy in the world by 2050. Mexico and Indonesia will be larger than the UK and France by 2030 while Turkey could be larger than Italy. Nigeria and Vietnam are anticipated to be the fast growing economies up to 2050

Top Ten Economies by GDP (PPP Terms)

The gap between the three biggest economies (China, India and U.S.) and the rest of the world will widen over the next four decades. It is projected that the third biggest economy (U.S.) will be 240% larger than the fourth largest economy (Indonesia). Indonesia (4^th) and Nigeria (9^th) will rise significantly by 2050.  But the great thing of this is that three of the four largest economies in the world are in Asia.  It can give the rise to the New United States of Asia ("USA").

However, income per capita will be higher in advanced economies than emerging ones – as the current gap is too wide to bridge by 2050.

What are the implications for a business strategy?

Malaysians and businessmen, in general, will need to focus on the three largest economies of the world – China, India and the U.S. The others that could provide good opportunities will include Indonesia, Vietnam, Nigeria and Mexico. Although emerging markets have considerable growth potential, it can be an institutional minefield. Local knowledge, key partnerships are the way to go. Opportunities will arise in infrastructure – rail, road, water, power – and in services such as technical, financial and policy settings. So, for Malaysia we need outward-looking policies that encourage trade and investments in key large economies of the future.

Reference:          The World in 2050: Will the shift in global economic power continue?

                                                                   PricewaterhouseCoopers, Feb. 2015