India will be the third largest economy in the world after China and United States by 2050, a U.S.-based internationally recognised foreign-policy think tank has said.
An article “The G20 in 2050”, carried in November bulletin of the Carnegie Endowment for International Peace said, “China, India, and the United States will emerge as the world’s three largest economies in 2050. Their total GDP, in real U.S. dollar terms, will be over 70 per cent more than that of the other G20 countries combined.”
Other main findings include, China will become the world’s largest economy in 2032, and grow to be 20 per cent larger than the United States by 2050. Over the next forty years, nearly 60 per cent of G20 economic growth will come from Brazil, China, India, Russia, and Mexico alone.
The article was written by Uri Dadush and Bennett Stancil. A Frenchman and former director of World Bank, Dadush is the director of the International Economics Programme at the Foundation, and Stancil is a Fellow at the Programme.
“In China and India alone, GDP is predicted to increase by nearly USD 60 trillion — the current world GDP—but the wide disparity in per capita GDP among these three will persist,” they noted.
India’s annual average GDP growth between 2009-2050 is predicted to 6.19 per cent, and these emerging markets will not rise among the world’s richest countries in per capita terms — their average income in 2050 will still be 40 per cent below that of the G7 nations presently.
Stressing that the world’s economic powers are shifting dramatically, the economists noted that the “G20’s recent transformation into the world’s principal economic forum highlights the beginning of a more integrated and complex economic era.”
Over the next 40 years, the G20 GDP is expected to grow at an average annual rate of 3.6 per cent, rising from USD 38.3 trillion in 2009 to USD 161.5 trillion in 2050, in real US dollar terms.
Nearly 60 per cent of this USD 123 trillion dollar expansion will come from Brazil, Russia, India, China and Mexico (BRIC+M).
The experts also find that out of the G20 countries, “India is predicted to grow most rapidly, but its current modest size will prevent it from surpassing either China or the United States in real US dollar terms.”
The authors observe that the growth could be even faster, but the low quality of education, infrastructure, governance, and business climate will hold back progress in developing countries. Technological convergence is expected to be lower in India and Indonesia than in China and Russia.
India’s Purchasing Power Parity (PPP) will be 97 per cent as large as that of the United States by 2050. India is expected to become the world’s most populous nation in 2031 — and an average exchange rate appreciation of 0.9 per cent per year will push annual GDP growth to an average of 6.2 per cent, according to the study.
“India’s US dollar GDP will balloon to USD 17.8 trillion in 2050, sixteen times its current USD 1.1 trillion level,” write Dadush and Stancil.
On the future of Europe, the report stresses that “to retain their historic influence, European nations will increasingly need to conduct foreign policy under an EU banner, a shift implied by their recently ratified constitution.” It warns that the once great power Russia may be marginalised in the new economic order if it remains outside regional coalitions.
Currently, Germany, the UK, France, and Italy are the fourth through seventh largest economies in the world. By 2050, the UK, helped by demographic trends, will be the largest of the four, ranking seventh in the world. Italy will be the smallest, ranking fifteenth.
PPP GDP in these four countries will be less than half of that in India and less than one-fourth of that in China, the report finds.