India's will overtake the U.S. in forty years in terms of GDP at purchasing power parities (PPP) while China will sail past its financial and political rival as early as 2018, a PricewaterhouseCoopers (PwC) report said on Friday.
PwC says the global financial crisis has accelerated the shift in economic power to emerging economies. Pointing to a massive shift of global financial muscle power in years to come, the report says the E7 emerging economies - China, India, Brazil, Russia, Mexico, Indonesia and Turkey - will overtake the G7 economies of US, Japan, Germany, UK, France, Italy and Canada before 20.
However, if GDP at market exchange rates (MERs) is used to gauge the trend, the power shift will be slower but equally inexorable, with the E7 projected to overtake the G7 around 2032, the report says.
The most significant increase in its share of world GDP is actually projected for India rather than China. In 2009 India’s share of world GDP measured at MERs was just 2%., the report says, adding that India will overtake Japan as early as 2011 based on GDP at PPPs.
The report says Australia and Argentina may be relegated from the ranks of the largest G20 economies by 2050, while Vietnam and Nigeria have the potential to join this list.
It says Indonesia could rise from the sixteenth biggest economy in PPP terms in 2009 to the eighth biggest by 2050. It will overtake France, the UK and Germany over the next 40 years.
The report says UK will just mange to stay in the top ten bracket by 2050, with a ranking of 9 based on GDP at market exchange rates, or 10th based on GDP at PPPs.
“In many ways the renewed dominance by 2050 of China and India, with their much larger populations, is a return to the historical norm prior to the Industrial Revolution of the late 18th and 19th centuries that caused a shift in global economic power from Asia to Western Europe and the US – this temporary shift in power is now going into reverse, said John Hawksworth, chief economist at PwC, said.