World Bank, 2006

The United Nations medium population projection suggests that world population could be 9 billion, up from 6 billion today. Almost all that increase will show up in the cities and towns of developing countries.

With 2 percent growth of per capita GDP in rich countries (the average over the past 20 years) and 3.3 percent in low- and middle-income countries, world income would be more than $135 trillion, up from $35 trillion today. With these growth rates, 40 per-cent of world income in 2050 would be earned in low- and middle-income countries—twice their share today.

Services could constitute 60 percent of GDP in developing countries in 2050, but that figure would still be 10 percentage points lower than in industrial countries today. It is therefore possible that primary and industrial sectors will have a significant weight in the economies of developing countries.

Higher incomes will almost certainly reduce pressure on local biomass as an energy source. But the energy substituted may be carbon-intensive.

If present trends continue, the world of 2050 will also be much less biologically di-verse. Part of the challenge is to reduce the number of poor communities dependent on fragile ecosystems.

Climate change will reduce the quantity and quality of water in most arid and semiarid regions in addition to increasing the frequency of floods and droughts worldwide. With almost any degree of warming, climate change will decrease agricultural productivity throughout the tropics and subtropics, it will increase the incidence of vector and wa-terborne diseases and heat stress mortality, it will make hydropower less reliable in some regions, and it will adversely affect biodiversity at the species and ecosystem

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HSBC, 2011

By 2050, the collective size of the economies we currently deem 'emerging' will have increased five-fold and will be larger than the developed world. And 19 of the 30 largest economies will be from the emerging world. At the same time, there will be a marked decline in the economic might – and potentially the political clout – of many small population, ageing, and rich economies in Europe:

• World output will treble, as growth accelerates on the back of the emerging economies. On average, annual world growth is projected to be accelerate towards 3% compared with growth of just over 2% in the 2000s.  Emerging-world growth will contribute twice as much as the developed world to global growth over this period.
• By 2050, the emerging world will have increased five-fold and will be larger than the developed world.
• 19 of the top 30 economies by GDP will be countries that we currently describe as ‘emerging’.
• China and India will be the largest and third-largest economies in the world, respectively.
• Substantial progress up the global league table will be made by a host of other emerging economies most notably, Mexico, Turkey, Indonesia, Egypt, Malaysia, Thailand, Colombia and Venezuela.
• These projections combine prospects for per capita GDP and the demographic outlook. Income per capita should grow in all the countries that we consider. But demographic patterns vary significantly across the world and have a major influence on growth prospects.
• The US and UK, with better demographic outlooks, are relatively successful at maintaining their positions.
• But the small-population, ageing, rich economies in Europe are the big losers. Switzerland and the Netherlands slip down the grid significantly, and Sweden, Belgium, Austria, Norway and Denmark drop out of our Top 30 altogether.
• This may have implications for the ability of these economies to influence the global policy agenda. Already Europe has been forced to concede two seats on the IMF’s executive board in order to make way for some emerging economies. This adds a whole new dimension to the current Eurozone crisis, and provides a significant incentive to euro-area countries to work through their current difficulties and remain a union.
• Demographic change is even more dramatic outside of Europe. The working population will rise by 73% in Saudi Arabia and fall by 37% in Japan. That is reflected in these countries' differing fortunes in our top 30 table.
• By 2050, the seismic shift in the global economy will have only just begun. Despite a seven-fold increase, income per capita in China will still be only 32% of that in the US and scope for further growth will be substantial. This ‘base effect’ must be considered when comparing current growth in the emerging world with that of the developed world.
• Energy availability need not hinder this path of global development so long as there is major investment in efficiency and low-carbon alternatives. Meeting food demand may prove more of a challenge, but improvements in yield and diet could fill the gap.

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PWC, 2011

The first important point to note from our analysis is that there is no single right way to measure the relative size of emerging economies such as China and India as compared to the G7 economies. Depending on the purpose of the exercise, GDP at either market exchange rates (MERs) or purchasing power parities (PPPs) may be the most appropriate measure. In general, GDP at PPPs is a better indicator of average living standards or volumes of outputs or inputs, while GDP at MERs is a better measure of the current value of markets from a shorter term business perspective. In the long run, however, it is important that business planners take into account the likely rise in real market exchange rates in emerging economies towards their PPP rates, although our modelling suggests that, for countries such as China and India, this exchange rate adjustment may still not be fully complete even by 2050.

Secondly, in our base case projections, the E7 economies will by 2050 be around 64% larger than the current G7 when measured in dollar terms at projected MERs, or around twice as large in PPP terms. In contrast, total E7 GDP is currently only around 36% of the size of total G7 GDP at market exchange rates and around 72% of its size in PPP terms.

Thirdly, there are likely to be notable shifts in relative growth rates within the E7, driven by demographic trends. In particular, both China and Russia are expected to experience significant declines in their working age populations over the next 40 years. In contrast, countries like India, Indonesia, Brazil, Turkey and Mexico (being relatively younger) should on average show higher positive growth over the next 40 years. However, they too will have begun to see the effects of ageing by the middle of the century.

Fourth, India has the potential to be the fastest growing large economy in the world over the period to 2050, with a projected GDP at the end of this period close to 83% of that of the US at MER, or 14% larger than the US in PPP terms. China, despite its projected marked growth slowdown, is projected to be around 35% larger than the US at MERs by 2050, or around 57% larger in PPP terms. China could overtake the US as the world’s largest economy as early as 2018 based on GDP at PPPs, or around 2032 based on GDP at MERs.

Fifth, while the G7 economies will almost inevitably see their relative GDP shares decline (although their average per capita incomes will remain well above those in emerging markets), the rise of the E7 economies should boost average G7 income levels in absolute terms through creating major new market opportunities. This larger global market should allow businesses in G7 economies to specialise more closely in their areas of comparative advantage, both at home and overseas, while G7 consumers continue to benefit from low cost imports from the E7 and other emerging economies.

Sixth, trade between the E7 and the G7 should therefore be seen as a mutually beneficial process for economies and businesses: a win-win proposition, not a zero sum competitive game. This is certainly true for UK businesses, which should see this as an opportunity to rely less on trading with the US and the EU and more with the emerging economies. At the same time, there will clearly be new competitive challenges from rising multinationals based in the E7 economies, so those UK or European companies that continue to rely only on their domestic markets could see their market share progressively eroded by emerging economy rivals.

Finally, there will also be challenges arising from the rapid rise of China, India and other emerging economies in terms of pressure on natural resources such as energy and water, as well as implications for climate change. Commodity prices will tend to remain high, so boosting exporters of these products (e.g. Brazil, Russia, Indonesia, the Middle East) and increasing input costs for natural resource importers.

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Netherlands Bureau for Economic Policy Analysis (CPB), 2010

This study develops four scenarios that can be used to think about the future of the Dutch economy in 2040. The study addresses the question of how we will earn our money in 2040 by looking at people and cities. How should policymakers deal with the uncertainty about the future - as far as 2040 - when taking such strategically important decisions?  People that are better able to deal with different future states will be more successful because they are better able to prepare for unforeseen contingencies. The scenarios in this study are four consistent stories for such contingencies. They deal with two basic uncertainties: (i) the future division of tasks among workers—will it occur anywhere in the world or will production occur more locally and (ii) whether the size of cities will become larger or smaller. Together, these two uncertainties lead to the four scenarios presented in the figure below. The horizontal axis presents the options for the division of tasks, the vertical axis shows the possibilities for city size. The scenarios are labelled such that the first term reflects the characterisation of people and the second informs about the type of location.

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Uri Dadush and Bennett Stancil.
Carnegie Endowment for International Peace, 2010.

• Labor Force Growth. Demographic drivers will significantly influence the economic transformation. Over the next forty years, the global labour force will grow rapidly and nearly exclusively in developing countries. These countries will accrue the economic benefits of population growth as their working-age population (people aged 15–59) rises, while that of industrialized countries falls.
• Capital Stock. Physical capital stocks will continue to accumulate as incomes rise and savings rates cover depreciation and allow for new investment. However, as the marginal contribution of capital to output declines, the incentive to invest will be reduced. In industrialized countries, savings as a share of GDP will likely decline as populations age and the dependency ratio increases. In developing countries, where capital to output ratios are much lower, capital stocks will rise substantially as the working population increases. China stands out as an exception; despite a shrinking population, investment is expected to remain high.
• Technological Progress and Productivity. Spreading technology will bolster world economic growth. Developing countries will continue to absorb well established technologies, such as electricity and sanitation. While the largest urban agglomerations and elite firms and individuals in developing countries typically have access to such technologies, rural areas and less favoured segments of society often do not.
• The New Triad. China, India, and the United States will emerge as the world’s three largest economies in 2050, with a total real U.S. dollar GDP of 70 percent more than the GDP of all the other G20 countries combined. In China and India alone, GDP is predicted to increase by nearly $60 trillion, the current size of the world economy. However, the wide disparity in per capita GDP will remain.
• Europe’s Changing Role. The next forty years will be a critical period for the European Union (EU) and its 27 members. Germany, the UK, France, and Italy—currently the fourth through seventh largest economies in the world— are expected to grow by only 1.5 percent annually from now until 2050. These four countries’ share of G20 GDP is will shrink from 24 percent in 2009 to 10 percent in 2050. In 2050, assuming the region follows the 1.5 percent average growth rate of its four largest countries, the EU’s real U.S. dollar GDP will increase to $25.8 trillion, placing it among the three largest economies in the world. If they stand alone, Germany, the UK, and France will all be surpassed by China, India, Brazil, and Mexico; Italy will fall even farther behind and be larger than only four other G20 countries.
• The Decline of Poverty. The world in 2050 will also be profoundly different in human terms. Rapid growth in the emerging economies will pull hundreds of millions of people out of absolute poverty, leaving only a small fraction of the G20 population behind. Absolute poverty will, however, remain a significant, though much smaller, phenomenon in Africa.
• Climate change. Climate change will hurt global growth through effects on health outcomes, agricultural yields, involuntary migration, and the destruction of infrastructure. According to the Stern Review, as extreme climate events grow increasingly common and temperatures rise 2–3 degrees Celsius by 2099—the most likely climate change scenario13—the equivalent of a 5 percent reduction in per capita consumption, now and forever, will hit the global economy, with reductions as high as 20 percent possible. Developing countries will bear the brunt of these negative effects, but developed countries will be hurt as well, especially if temperatures rise more than the expected 2–3 degrees Celsius.

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The World Order in 2050

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B. Hornblow, B. Weidema
Sixth framework programme, EC. 2007

This deliverable reviews existing macro-economic forecasting studies and models, and based on this recomends how best to develop the three macro-economic scenarios for WP5 of the FORWAST project. We recomend that the baseline scenario presented in the "European Energy and Transport: Trends to 2030" be used as the basis from which the FORWAST...

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Review on recent macro-economic scenarios

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Evan Hillebrand
University of Kentucky
World Development Vol. 36, No. 5, pp. 727–740, 2008

This paper has taken a long view of economic growth, poverty, and inequality—a view from 1820 to 2050. While acknowledging that the data are far from perfect and the methodology to fill in the gaps requires a substantial amount of guesswork, key contributions in the literature- especially Maddison (1995, 2001, 2003), and Bourguignon and Morrisson (2002)—have established that world economic growth has been, on average, very high since 1820, high enough to cause global poverty rates to fall dramatically. More recent work—especially Chen and Ravallion (2004a, 2004b), Bhalla (2002), and Sala-i-Martin (2002a, 2002b)—has shown that the downward trend in the global poverty rates accelerated after 1980 and even the poverty headcount has started to show a significant decline.

Attachments:

worlddevelopmentarticle.pdf

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PricewaterhouseCoopers, 2007

This report examines the possible changes in the scale of the banking sector between now and 2050, highlights the pace of change, and provides some measure of the size of the opportunities and challenges for banks. For example, the new projections suggest that: total domestic credit in China could overtake the UK and Germany by 2010, Japan by 2025, and the US before 2050; India could rise from today’s relatively low levels to emerge as the third largest domestic banking market in the world by 2040—and could ultimately grow faster than China; and Brazil, Indonesia, Mexico, Russia and Turkey are also likely to see rapid expansion in their banking sectors, all having the potential to match major European economies such as France and Italy before 2050.

Attachments:

world_2050_banking.pdf

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