India is likely to emerge as the third-largest economy in the world in just over a decade from now, surpassing Japan and Germany, according to a new report from HSBC Global Research. As seen in Chart 1, China is projected to be the largest economy in the world by 2030, followed by the US and India.
According to the report, the advanced economies of Denmark and Norway are likely to be the biggest losers in the coming decade, falling nine and ten positions on global rankings, respectively. On the other hand, as seen in Chart 2, countries like Bangladesh and the Philippines will be the biggest gainers over this period.
In part, these countries, along with India, will benefit from the demographic dividend. These countries will have a faster-growing working-age population (Chart 3) and young people should become more productive particularly as education rates continue to rise across the emerging economies. Further, there are also the benefits from technological catchup (Chart 4).
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Thus the report argues that countries which have a low starting point in terms of level of GDP per capita and have favourable demographics should grow reasonably quickly as long as other components of growth are in place. As seen in Chart 5, it estimates that the fastest-growing countries will be those in the middle of the top-left quadrant, namely — India, Bangladesh and Vietnam.
At the aggregate level, the report expects the world economy to grow at just below 3 per cent (Chart 6). But the drivers of growth will have changed. As seen in Chart 7, while over the past decade, emerging economies accounted for about half of global growth, over the coming decade, roughly 70 per cent of global growth will be from emerging economies.
Source: The World in 2030, HSBC Global Research
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