Thursday, October 09, 2003
Tomorrow's Economic Giants
Here is a story that I have been wanting to see in the press for a long time. In fact, I have made posts about the relative ignorance in the West about the growth trajectories of several developing country economies and in particular India and China (especially since these developments will have profound geo-political consequences). The Economist story is about a Goldman Sachs study done on BRIC's (or Brazil, Russia, India and China) -- the economic giants of tomorrow.
A new study by Goldman Sachs focuses on the so-called BRICs (Brazil, Russia, India and China). Today their combined GDP (at market exchange rates) is one-eighth of the output of the G6 (Goldman leaves out Canada, which accounts for only 3% of the G7's GDP) But the study concludes that the total output of the four economies will overtake that of the G6 in less than 40 years. Of today's G6, only America and Japan would then still be among the world's six biggest economies.
China is tipped to overtake Germany by 2007, Japan by 2015 and America by 2041. India could overtake Japan by 2032. All four BRICs will be bigger than any western European economy by 2036. For firms looking where to invest, the most striking result is that, by 2009, the annual increase in total dollar spending in the BRICs could be greater than that in the G6. By 2025, spending could be increasing twice as fast in the BRICs.
Just for the record, if one were to use PPP measures, China is already the world's second largest economy and India the fourth largest. In order, that would be U.S, China, Japan, India and Germany. The nominal dollar stats would be different, though India and China would still be in the top 10 economies.
PS: I am not sure why Russia figures in this group. As I understand it, the demographics of Russia is certainly not conducive to keep rapid economic growth going. Plus Russia isn't exactly an immigrant friendly country.
A new study by Goldman Sachs focuses on the so-called BRICs (Brazil, Russia, India and China). Today their combined GDP (at market exchange rates) is one-eighth of the output of the G6 (Goldman leaves out Canada, which accounts for only 3% of the G7's GDP) But the study concludes that the total output of the four economies will overtake that of the G6 in less than 40 years. Of today's G6, only America and Japan would then still be among the world's six biggest economies.
China is tipped to overtake Germany by 2007, Japan by 2015 and America by 2041. India could overtake Japan by 2032. All four BRICs will be bigger than any western European economy by 2036. For firms looking where to invest, the most striking result is that, by 2009, the annual increase in total dollar spending in the BRICs could be greater than that in the G6. By 2025, spending could be increasing twice as fast in the BRICs.
Just for the record, if one were to use PPP measures, China is already the world's second largest economy and India the fourth largest. In order, that would be U.S, China, Japan, India and Germany. The nominal dollar stats would be different, though India and China would still be in the top 10 economies.
PS: I am not sure why Russia figures in this group. As I understand it, the demographics of Russia is certainly not conducive to keep rapid economic growth going. Plus Russia isn't exactly an immigrant friendly country.
