Currently, the top economy in the world is that of the United States, but it could be overtaken in the next decade according to forecasts by Standard Chartered. Looking ahead to 2030, the firm believes that seven of the world’s top 10 economies likely will be from emerging markets.
This comes on the basis of gross domestic product (GDP) rankings. While China could become the largest by this measure in 2020, a decade later the margin could widen significantly and India looks to gain a foothold as well.
According to the study, India’s economy likely will be larger than the United States by 2030, while Indonesia will break into the top five economies.
David Mann and other Standard Chartered economists said in a note:
Our long-term growth forecasts are underpinned by one key principle: countries’ share of world GDP should eventually converge with their share of the world’s population, driven by the convergence of per-capita GDP between advanced and emerging economies.
The firm projects trend growth for India to accelerate to 7.8% by the 2020s, while China’s will moderate to 5.0% by 2030, reflecting a natural slowdown given the economy’s size.
Asia’s slice of the global GDP pie rose to 28% last year, up from 20% in 2010. This likely will reach 35% by 2030, matching that of the euro area and United States combined.
Standard Chartered’s economists shared some other findings:
- Waning reform momentum in emerging markets weighs on productivity growth
- The end of the quantitative easing era may mean more pressure on economies to reform and revive productivity trends
- The middle-class is at a tipping point, with a majority of the world’s population entering that income group by 2020
- Middle-class growth driven by urbanization and education should help counter the effects of the rapid population aging trend in many economies, including China