Asia to dominate world economies by 2030

HONG KONG • Seven of the world’s top 10 economies by 2030 will likely be current emerging markets (EMs).

The prediction for a shake-up of the world’s GDP rankings comes in new long-term forecasts by Standard Chartered plc (StanChart), which includes a projection for China to become the largest economy by 2020, using purchasing power parity exchange rates and nominal GDP.

India will likely be larger than the US in the same time period, while Indonesia will break into the top five economies.

“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,” StanChart economists led by David Mann wrote in a note.

They project trend growth for India to accelerate to 7.8% by the 2020s, while China’s will moderate to 5% by 2030, reflecting a natural slowdown given the economy’s size.

Asia’s share of global GDP, which rose to 28% last year from 20% in 2010, will likely reach 35% by 2030 — matching that of the euro-area and US combined.

Here are some other findings from StanChart economists:

Waning reform momentum in EMs 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 urbanisation and education should help counter the effects of the rapid population aging trend in many economies, including China. — Bloomberg