China’s economy will become the world’s largest in 2037, Russia’s economy will fall several places and the UK’s economy will grow almost 20% faster than France’s by 2038, predicts British think tank CEBR.
The British think tank Center for Economics and Business Research (CEBR) publishes a long-term global economic forecast at the end of each year. The latest forecasts contain messages of hope for the United Kingdom and India and bad news for Germany, France and Russia.
Therefore, the British economy is expected to grow faster than the French and German ones in the coming decades. The CEBR predicts the UK’s economy will be 10.2% larger than France’s in 2033, and the gap between the two countries will widen to 19.9% in 2038.
At the same time, the British economy’s lag behind the German economy will decrease from almost 33% to 28.8%. The reason is Germany’s slower long-term economic growth, due to the loss of cheap Russian energy.
Thus, according to forecasts, in 2026 Germany will lose the title of the world’s third largest economy to Japan, and in 2027 the main European economy will fall to fifth place in the ranking, behind even India.
India is expected to become the third largest economy in the world by 2035, and its nominal volume will cross the symbolic threshold of $10 trillion. Therefore, in the future we will no longer be able to talk about a bipolar world between the United States and China, because India’s role in the world will continue to grow.
“Thanks to strong demographic trends and diversified economic fundamentals, India’s growth is expected to continue,” CERB chief economist Pushpin Singh told the Times.
However, the Russian economy is facing a long-term decline in the ranking of countries in the world. If this year the Russian economy was the eighth largest in the world, it will fall to 11th place already in 2024 and even to 14th place in 2038. Moscow’s prospects are weak due to the impact of sanctions.
Although China’s economic growth was slower than expected last year and this year due to problems in the real estate sector, the CEBR still predicts that Beijing will reclaim the title of the world’s largest economy by 2037.
“The Chinese economy has weathered several volatile years. However, the outlook for the economy remains strong and we expect China to overtake the United States as the world’s largest economy in the next 15 years,” the economist said CEBR Sam Miley.
At the same time, the think tank predicts that the United States will return to being the world’s largest economy in the 2050s, while India is expected to become the world’s largest economy by the end of the century. Therefore, China’s heyday will be short-lived.
According to CEBR calculations, the size of the global economy will double in the next 15 years: if the volume of the world economy this year is 104 trillion dollars, in 2038 the global economy will reach 219 trillion dollars. Growth in developing countries such as Vietnam, Bangladesh and the Philippines is expected to make the largest contribution.
According to economists, the problems related to climate change have not disappeared, even if recent geopolitical and economic difficulties have relegated them to the background. CEBR predicts that the negative consequences of climate change will begin to affect the world especially in the second half of the century.
The think tank also warned that countries’ different approaches to achieving carbon neutrality lead to differences in economic growth. Specifically, lower growth is expected for countries that contribute more to emissions reductions and higher economic growth for developing countries with softer climate policies.
“One of the biggest driving factors behind the changes in this year’s ranking is the different speed of implementation of climate-neutral policies. The European Union is leading the way in this area. Meanwhile, Asian countries are moving more slowly in this direction, so the cost to the economy is less. Countries like India, [Lõuna-]Korea, Indonesia, Bangladesh, Vietnam and the Philippines are expected to rise sharply in the rankings,” said Douglas McWilliams, deputy director of the CEBR.
McWilliams also warned that the green transition will create new industrial jobs, but these jobs will tend to be located in Asia.
“Jobs will be created with the transition. The problem for the UK is that many of these jobs will be created in China, which leads the electric vehicle market,” she said. According to McWillimas, countries with a weak industrial base like the UK are unlikely to be able to develop their industrial base quickly.
Other analysts have also recently begun to highlight the cost of the green transition. Thus, the Organization for Economic Co-operation and Development (OECD) warned that achieving climate neutrality would cost the world $3.6 trillion and reduce, for example, the UK’s gross domestic product by £60 billion .
Furthermore, phasing out coal and reducing oil consumption will reduce global economic growth by 0.2 percentage points over the next few years, according to the OECD.
Another factor in favor of developing countries is their more favorable demographic situation, especially compared to developed countries dealing with an aging population.
The CEBR also expects inflation to slow next year thanks to central banks’ restrictive monetary policy, although this will also come at the lowest annual growth rate since 2002.
British Chancellor of the Exchequer Jeremy Hunt is pleased with the survey results.
“Those who decry the British economy are wrong. Since 2010 we have grown faster than any other major European economy and the CEBR predicts that in the long term we will grow faster than France and Germany,” Hunt said.
2023-12-26 08:08:00
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