November 12, 2012
Balance of economic power will shift dramatically over the next 50 years, says OECD
"The next 50 years will see major changes in country shares in world GDP. On the basis of 2005 purchasing power parities (PPPs), China is projected to surpass the Euro Area in a year or so and the United States in a few more years, to become the largest economy in the world, and India is projected to surpass Japan in the next year or two and the Euro area in about 20 years. The faster growth rates of China and India imply that their combined GDP will exceed that of the major seven (G7) OECD economies by around 2025 and by 2060 it will be more than 1½ times larger, whereas in 2010 China and India accounted for less than one half of G7 GDP. Strikingly, the combined GDP of these two countries will be larger than that of the entire OECD area, based on today’s membership, in 2060, while it currently amounts to only one-third of it. Such changes in shares of world GDP will be matched by a tendency of GDP per capita to converge across countries, which however will still leave significant gaps in living standards between advanced and emerging economies. Over the next half century, the unweighted average of GDP per capita (in 2005 PPP terms), is predicted to grow by roughly 3% annually in the non-OECD area, as against 1.7% in the OECD area. As a result, GDP per capita in the poorest economies will (in 2011) more than quadruple (in 2005 PPP terms), whereas it will only double in the richest economies."