China Will Beat US To Become World’s #1 Economy In 7 Years; India Will Beat Japan To Become #3
According to a report published by the Centre for Economics and Business Research on Saturday, after weathering the coronavirus pandemic better than the Western counterparts, China is all set to overtake United States to become the world’s biggest economy in 2028.
US & China To Trade Places:-
It was estimated that the world’s biggest and second-biggest economies are on course to trade places in dollar terms in 2028, but it came five years earlier due to contrasting recoveries after being hit by the pandemic. It said “The COVID-19 pandemic and corresponding economic fallout have certainly tipped this rivalry in China’s favor”.
According to the CEBR said China’s “skillful management of the pandemic”, with its strict early lockdown, and hits to long-term growth in the West meant China’s relative economic performance had improved.
China looked set for average economic growth of 5.7% a year from 2021-25 before slowing to 4.5% a year from 2026-30.
While the United States was likely to have a strong post-pandemic rebound in 2021, its growth would slow to 1.9% a year between 2022 and 2024, and then to 1.6% after that.
What Will Happen To Japan, India & United Kingdom:-
In the dollar terms, Japan would remain the world’s third-biggest economy, until the early 2030s when it would be overtaken by India, which will further cement Asia’s growing might. This will push Germany down from fourth to fifth.
Currently the fifth-biggest economy by the CEBR’s measure, The United Kingdom, would slip to sixth place from 2024.
Helped by Britain’s lead in the increasingly important digital economy, British GDP in dollars was forecast to be 23% higher than France’s by 2035, despite a hit in 2021 from its exit from the European Union’s single market.
CEBR said that, Europe’s output which till 2020 accounted for 19% of output in the top 10 global economies will fall to 12% by 2035. It may further lower down if the split between the EU and Britain turns acrimonious.
It also said the pandemic’s impact on the global economy was likely to show up not in slower growth but in higher inflation.
“We see an economic cycle with rising interest rates in the mid-2020s,” it said. This will pose a challenge for governments which have borrowed massively to fund their response to the COVID-19 crisis.
“But the underlying trends that have been accelerated by this point to a greener and more tech-based world as we move into the 2030s.”
In its World Economic League Table, the consultancy also calculated that China could become a high-income economy as soon as 2023.
Chinese President Xi Jinping said last month it was “entirely possible” for his economy to double in size by 2035 under his government’s new Five-Year Plan, which aims to achieve “modern socialism” in 15 years.
China was the first economy to suffer a pandemic blow, but has recovered swiftly, according to government data. That should prompt Western economies to pay much more attention to what is happening in Asia, according to the report “Typically, we compare ourselves with other Western economies and miss out on what often is best practice, especially in the rapidly growing economies in Asia,” it said.