By IE&M Research
According to PwC, E7 economies comprising Brazil, China, India, Indonesia, Mexico, Russia and Turkey would grow at an annual average rate of almost 3.5% over the next 34 years, compared to just 1.6% for the advanced G7 nations of Canada, France, Germany, Italy, Japan, the UK and the US. Thus the global economic order is expected to shift from advanced to emerging economies over the next few decades. The report says that by 2040 India could edge past the US to become the world’s second largest economy in purchasing power parity (PPP) terms.
In fact, China has already overtaken the US to become the world’s largest economy in PPP terms, while India currently stands in third place and is projected to overtake the US by 2040 in PPP terms. Moreover, PwC believes Vietnam, India and Bangladesh would be three of the world’s fastest growing economies over this period. The E7 could comprise almost 50% of world GDP by 2050, while the G7’s share declines to only just over 20%. However, to realise this growth potential, emerging market governments need to implement structural reforms to improve macroeconomic stability, diversify their economies away from undue reliance on natural resources (where this is currently the case), and develop more effective political and legal institutions.