A Brave New World is coming? Perhaps. We had a recent discussion with a group of people in the hopeless business of doing long term forecasting. This made us think about what the world will look like over the next 20 to 40 years. A pretty thankless task, but the bottom line is without a damn good war, Asia will be the way of the future.
As an experiment, assume, as most long term forecasters do, that both Europe and the US have reached a mature plateau where growth will average around 1.5 to 2 per cent over the long term, while China will slowly decelerate from the current 6.5 to 3 per cent and India from today`s 7 to around 4. In this scenario (which we do not necessarily believe in, as China is up for en epic crash) what will be the share of global GDP by, say, 2060? And what are the geopolitical implications?
Using data from Angus Maddison, the IMF and then extrapolating with our simple assumptions (which are just as good as any) we get the following picture.
In international dollar terms (PPP) China is already the world largest economy. By 2060, under the abovementioned assumptions, China will constitute almost 30 per cent of global GDP, almost reaching the level Western Europe had when establishing the European dominance over the world. The US and Europe will both be less than 10 per cent of the world economy. It is also interesting to note that India will surpass Western Europe already in 2030 and be close to 20 per cent by 2060. The two Asian behemoths will together constitute 45 per cent versus the US and Western Europe’s mere 17 per cent in 2060.
What happened the last time such seismic shifts in …