and France out of the top ten economies of the world by 2050 provided
they are able to build their institutions to global standards,
diversify their economies and sustain growth friendly policies. This
is one of the key findings of the global report from
PricewaterhouseCoopers' (PwC) economists titled "The World in 2050:
Will the shift in global economic power continue?" This presents
long-term projections of potential GDP growth up to 2050 for 32 of the
largest economies in the world, covering 84 per cent of total global
GDP.
According to the report, the current global economic power shift away
from the established advanced economies in North America, Western
Europe and Japan will continue over the next 35 years, despite a
projected slowdown in Chinese growth after around 2020.
The world economy is projected to grow at an average of just over 3
per cent per annum from 2014-50, doubling in size by 2037 and nearly
tripling by 2050. But there's likely to be a slowdown in global growth
after 2020, as the rate of expansion in China and some other major
emerging economies moderates to a more sustainable long-term rate, and
as working age population growth slows in many large economies.
Nigeria, Vietnam and the Philippines are notable risers in the global
GDP rankings in the long term, reflecting relatively high projected
average growth rates of around 4.5-5.5 per cent per annum over the
period to 2050. According to Mr Andrew S. Nevin, PwC Nigeria's Chief
Economist and co-author of the report, "Over the past decade, Nigeria
has boasted superior economic growth and, with the right reforms and
investments, Nigeria could become one of the world's leading economies
by 2030, with further progress by 2050.
Nigeria's potential advantages for future growth include a large
consumer market, a strategic geographic location, and a young and
highly entrepreneurial population". He continued, "however, at the
same time, we are all aware of the significant headwinds (adverse
trends) created by the rapid drop in the oil price, putting pressure
on the fiscal and monetary systems, as well as reducing economic
growth in the short term.
To achieve its long-term economic potential, Nigeria will need to
manage the oil price decline effectively at all levels of government
and create a sustainable platform for diversification into the sectors
that we know will drive the economy in the future - including power,
agriculture, manufacturing, telecoms, hospitality and real estate".
Nevin concludes, "according to our long term projections, Nigeria
could sustain average growth of around 5-6 per cent per annum in the
long run, following projected growth of around 6-7 per cent in the
rest of this decade, assuming broadly growth-friendly policies are
pursued. While foreign investment has in absolute terms long been
focused on the oil sector, portfolios are becoming increasingly
diversified, moving towards the power, agriculture and mining areas of
the economy that have demonstrated a comparative advantage in emerging
markets vis-à-vis the West".
Recent experience has however underlined that relatively rapid growth
is not guaranteed for emerging economies, as indicated by recent
problems in Russia and Brazil. It requires sustained and effective
investment in infrastructure and improving political, economic, legal
and social institutions. Overdependence on natural resources,
according to the analyst, could impede long-term growth in countries
such as Nigeria, Russia, and Saudi Arabia unless they can diversify
their economies over time.
Nevin further concludes that "while our analysis confirms that
emerging markets have huge potential, they can also be an
institutional minefield - both managers and investors need to tread
carefully. Overall, Nigeria continues to be an attractive place to
invest not because it is an oil producer, but because of the immense
size of its domestic market and the extraordinary commercial energy of
its people, which remains largely untapped."
Beyond Nigeria, the PwC Report projects that China will be the largest
economy by 2030 on any measure. However, it also expects its growth
rate to slow markedly after around 2020 as its population ages, its
high investment rate runs into diminishing marginal returns and it
needs to rely more on innovation than copying to boost productivity.
Eventual reversion to the global average has been common for past high
growth economies such as Japan and South Korea and we expect China to
follow suit."
The report also contains projections based on GDP at market exchange
rates, without this relative price adjustment.
Read more at Vanguard:
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