Beyond the BRICs: updated global growth projections to 2050 |
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In March 2006 we published a report highlighting the rapid growth and increasing global significance of what we called the ‘E7’ emerging economies: the ‘BRIC’ economies of China, India, Brazil and Russia, plus Mexico, Indonesia and Turkey. In the special article in Section IV below, we update our long-term economic growth projections to take into account the latest available data and to extend the analysis to include 13 other emerging economies. Together with the 17 largest economies considered in our earlier report, this new ‘PwC 30’ grouping of countries account for around 85% of world economic output.
In our updated base case projections, the E7 emerging economies will by 2050 be around 50% larger than the current G7 (US, Japan, Germany, UK, France, Italy and Canada). China is expected to overtake the US as the largest economy in around 2025 in these updated projections, while India is now assessed as having the potential nearly to catch up with the US by 2050 (see Figure 1.4). We are now even more optimistic than in our original 2006 report about these two economies given their recent very strong performance.
There are, however, likely to be notable shifts in relative growth rates within the E7, driven primarily by divergent demographic trends. In particular, both China and Russia are expected to experience significant declines in their working age populations between 2005 and 2050. This is in contrast to relatively younger countries such as India, Indonesia, Brazil, Turkey and Mexico, whose working age populations should on average show positive growth over this period, although they too will have begun to see the effects of ageing by the middle of the century.
Our base case projections also suggest that:
The 13 new emerging economies considered in this report also have the potential to grow significantly faster than the established OECD economies (see Table 1.2). Some of these countries, such as Vietnam, appear to have immediate potential as inward investment locations for manufacturing in particular. Others, such as Nigeria, may appear to be high risk propositions now, but have considerable long-term potential if they can achieve and sustain a greater degree of political stability and economic openness in the longer term.
Table 1.2: Projected real growth rates for expanded group of emerging market economies: 2007-50 (%pa)
|
Country |
GDP in
US $ terms |
GDP in domestic currency or at PPPs |
Population |
GDP per capita at PPPs |
|
Vietnam |
9.8 |
6.8 |
0.8 |
6.0 |
|
India |
8.5 |
5.8 |
0.8 |
5.0 |
|
Nigeria |
8.0 |
6.1 |
1.6 |
4.4 |
|
Philippines |
7.2 |
5.2 |
1.1 |
4.1 |
|
Egypt |
7.1 |
5.1 |
1.1 |
3.9 |
|
Bangladesh |
7.0 |
5.1 |
1.1 |
3.9 |
|
China |
6.8 |
4.7 |
0.1 |
4.6 |
|
Indonesia |
6.7 |
4.5 |
0.6 |
3.9 |
|
Pakistan |
6.4 |
4.9 |
1.4 |
3.5 |
|
E7 average |
6.4 |
4.5 |
0.5 |
4.0 |
|
Malaysia |
5.8 |
4.3 |
1.0 |
3.3 |
|
Thailand |
5.7 |
3.6 |
0.1 |
3.5 |
|
Iran |
5.2 |
3.8 |
0.8 |
3.0 |
|
Brazil |
5.2 |
3.8 |
0.7 |
3.1 |
|
Turkey |
5.1 |
4.1 |
0.7 |
3.4 |
|
Argentina |
4.9 |
3.7 |
0.6 |
3.0 |
|
South Africa |
4.8 |
3.7 |
0.3 |
3.3 |
|
Saudi Arabia |
4.8 |
4.1 |
1.4 |
2.7 |
|
Mexico |
4.7 |
3.7 |
0.5 |
3.2 |
|
Russia |
4.3 |
2.5 |
-0.6 |
3.2 |
|
Poland |
3.4 |
2.1 |
-0.5 |
2.7 |
|
G7 average |
2.0 |
2.2 |
0.3 |
1.9 |
Sources: PricewaterhouseCoopers GDP growth estimates (rounded to nearest 0.1%), population growth projections from the UN. E7 and G7 averages shown in bold.
Our general message is that investors with long-time horizons should look beyond the BRICs – there are many other alternatives worth considering depending on the nature of the investment and the risk tolerance of the investor.
© 2008 PricewaterhouseCoopers. All rights reserved. PricewaterhouseCoopers refers to the network of member firms of PricewaterhouseCoopers International Limited, each of which is a separate and independent legal entity.
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