The PWC report earlier this year that predicted the continued rise of China and India in economic terms and the decline of the USA financial power seems to dominate the news agenda, however, there are other data that is relevant to the EU-BREXIT debate today, thus this report is worth revisiting.
There are other interesting data in the report as well that should excite countries from emerging economies particularly Nigeria.
The caveat is that the report is dependent on a lot of factors that may not be predictable that far ahead.
The PWC report was published in 2017, well after Britain voted to leave the EU (BREXIT), it Is not clear whether the possible impact of BREXIT on British economy was factored in the projection, but we are making assumption that since there has not been an addendum from PWC that we are aware of, the projection of British economy as stated in this report still.
In any case, assuming this report is to be true, it will represent a seismic power shift that the western countries need a major adjustment to get used to.
In our analysis, we used a baseline 2016 international monetary fund data and compared it with the PWC 2050 projection of world economy and we found the following:
NB: This highlight only comprises of countries that featured in the top 30 in the IMF 2016 and PWC 2050. Some countries are currently outside top 30 but are projected to break into the top 20 by 2050. Vietnam and Philippines are two of such countries.
The G7 members, if based solely on economic strength and GDP will change significantly. Even as of today, China and India on the basis of their economic strength should be among, replacing Italy and Canada.
The current members of the G7: USA, Japan, U.K, Germany, France, Italy and Canada.
HOW THINGS MIGHT CHANGE:
USA will remain a member of the G7 but will find itself accompanied by countries it does not usually agree with.
Possible line up of the G7 by 2050: China, India, USA, Indonesia, Brazil, Russia and Mexico
The European financial powerhouses of today will become a 2nd class and will be joined by emerging economies to form a 2nd rated G7 if there is to be anything like that.
If a new group of G7 is to be created, comprising of the next best 7 economies (2nd class) after the 1st best 7, the line-up will be as follow: Japan, Germany, U.K, Turkey, France, Saudi Arabia and Nigeria.
Other European countries like Italy, Spain, Netherland, Belgium and Austria will see their fortune plummet significantly while Poland will move the other way.
Italy will be out of top 20, Spain out of top 25 while Netherland, Belgium and Austria will crash out of top 30 economic powers in the world.
TOP FIVE PROJECTED BEST PERFORMING ECONOMIES IN THE WORLD BY 2050.
We picked the following countries based on their projected percentage rise between now and 2050 and how far up the table they are likely to rise.
India will be the fastest-growing economy in the world. India will Increase its GDP from 2.256 to 44.128 trillion dollars, an increase of about 1856%. Currently the 7th largest economy, India will become the 2nd largest economy by 2050 if they realise this potential. This will see them overtake America which will by then be the 3rd largest economy and China 1st.
Current population according to the 2015 World Bank record is 1.311b, annual growth rate in GDP of 7.6% with the service sector contributing 50% of its GDP while agriculture employs over 50% of the population. Life expectancy is 68 years
Indonesia will be the 2nd fastest growing economy in the world between now and 2050. Indonesia will increase its economy from just under a trillion dollars at 932.45b to over ten trillion dollars (10.502). Sitting at 16th in the world right now, Indonesia will become the 4th largest economy. This represents an increase of 1026%.
Indonesia has a population of 257.6 million, life expectancy of 68.8 years and an annual GDP growth rate of 4.8%. Indonesia is one of the largest exporters of crude petroleum and natural gas but manufacturing is the largest single contributor to Indonesia economy which overtook agriculture.
Nigeria will be one of the fastest growing economies in the world in decades to come. Nigeria is already the largest economy in Africa, ahead of South Africa and Egypt and currently the 27th richest country in the world. With a GDP of just less than half a trillion dollars ($405,952), Nigeria will increase its GDP by 970% to over 4 trillion dollars.
The population of Nigeria is 182.2m as per 2015 World Bank record, annual GDP rate of 2.7% with a life expectancy of 52.75 years.
The oil sector provides for 95% of Nigeria’s foreign exchange earnings and 80% of its budgetary revenues, even though the service sector contributes over 58% of its GDP composition.
Iran also makes the list as one of the potential financial powerhouses of the world. Iran is estimated to be worth $376,752b at the moment and ranked 29th richest in the world but will rise to 17th in the world by 2050 with an estimated GDP of $3.9T. A growth of 934%
Iran has a population of 79.11m as at 2015, annual GDP growth rate of between 4.6-9% and a life expectancy of 75.39 years.
The oil sector contributes the majority of its GDP with non-oil sector contributing just 0.9% of its GDP.
Poverty is estimated to have fallen from 13.1 percent to 8.1 percent between 2009 and 2013 (US$5.5 a day line in 2011 PPP). This was likely due to a universal cash transfer program in late 2010.
Some factors to consider in Iran’s economic growth is its willingness or refusal to integrate with other economies and continued lifting of the embargo by western powers.
The Latin American country is already a financial powerhouse, currently ranked 15th in the world with an estimated $1T GDP. Mexico will climb eight places to 7th in the world and become a member of our 1st class G7 based solely on GDP. Mexico annual GDP is expected to rise to $6.8T per annum, representing 556% rise from its current figure.
Mexico has a population of 127m people, annual GDP growth of 2.5% with a life expectancy of 76.72 years.
According to Forbes, remittances by Mexican citizens in the USA back to Mexico have replaced oil revenue as the main source of foreign income.
Mexico manufactures and exports the same amount of goods as the rest of Latin America combined
The two other countries to watch are Saudi Arabia and Turkey.
The oil-rich Saudi Arabia, currently 20th in the world with estimated GDP of over half a trillion dollar ($639,617) will climb to 13th by 2050 with over 4.5T dollar in GDP. Saudi rise will represent 634% from its current figure.
Turkey: 17th in the world with £857,429b will move to 11th in 2050, closely behind the UK with a GDP of 5.184T. That is 504% increase from its current figure.
FINAL ANALYSIS and BREXIT IMPACT:
In the final analysis, there is a power shift economically underway. The European economy as a group may resist the rise of the emerging economies but as an individual country, they will very likely be overtaken, with the exception of Germany, U.K and France, even those will fall off top 7.
An important point to note is that while as a group, the E.U appears to be growing; however, the growth will be lopsided as some countries will be declining and some continuing to grow albeit at a slower rate compared to other economies from Asia and Africa.
Britain is currently embroiled in BREXIT negotiation, the outcome of which may make or mar both British and European economy, however, based on the projected performances by emerging economies from Asia and Africa, BREXIT or not, it seems the slump likely to be suffered by some European countries like Belgium and Netherland cannot be prevented while Poland will be a surprise rising star.
Thus, membership of European Union does not guarantee growth or competitiveness of individual countries but it does restrict the ability of any one individual country to set or shape its own economic agenda.