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Museo en CartagenaThe World’s Economy in 2050; Europe & USA dwarfed by Today’s Emerging Economies

Categories: Business, Colombia
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Published on: 2013/01/29
From: 
The World in 2050; Quantifying the Shift in the Global Economy a study commissioned by HSBC Bank
International Man, http://www.internationalman.com/global-perspectives/on-the-ground-in-colombia-part-1
International Man, http://www.internationalman.com/global-perspectives/on-the-ground-in-colombia-part-2

With the rapid growth of the emerging markets, the global economy is experiencing a seismic shift…. By 2050, the collective size of the economies we currently deem ‘emerging’ will have increased five-fold and will be larger than the developed world.

19 of the 30 largest economies will be from the emerging world.

At the same time, there will be a marked decline in the economic might – and potentially the political clout – of many small population, ageing, rich economies in Europe

In HSBC’s The world in 2050, a perspective on the economic outlook in 2050, Colombia is seen playing a decisive role in the global economy and predicted to become the number 26 economy in the world, as measured by GDP (up from position 33 or 34 now depending on the research). It is also part of CIVETS, a group of emerging markets seen as “the next BRICs.”

GDP growth over the last 10 years averaged to about 5%, similar to that of Brazil, but less than neighboring Panama, which was growing a little faster. Interestingly, the Colombian economy did not contract in the disaster years of 2008 and 2009, posting a modest growth of 1.45% in 2009, showing pretty good economical resiliency. Last time its economy shrank was back in 1999.

The country is rich in natural resources, with the main industries being petroleum, coal, coffee and other agricultural produce, and gold. Colombia is also known as the world’s leading source of emeralds, and over 70% of cut flowers imported by the United States originate from Colombia.

The oil sector has been a huge success in Colombia, with production ramping up rapidly in the last several years. It went from 525,000 barrels per day in 2005, to almost a million in 2011. Yearly rate of increase is comparable with that of Brazil, which has been in the news much more extensively than Colombia, who is the fourth largest oil producer in South America. Production in Brazil per year is still much higher, with about 2.7 million barrels per day (2010).

The official currency in Colombia is the Peso, and it has been rising substantially over the last few years due to increasing investment inflows from outside the country

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From HSBC:

With the rapid growth of the emerging markets, the global economy is experiencing a seismic shift. But why is this change occurring? Will it continue? And how will the world look if it does? The answers to these questions are important for investors’ decisions today.
In this piece, we provide a framework for thinking about these issues. Based on our analysis of the Top 30 economies ranked by size of GDP in 2050, our conclusions are as follows:

 

  • World output will treble, as growth accelerates on the back of the emerging economies. On average, annual world growth is projected to be accelerate towards 3% compared with growth of just over 2% in the 2000s (Chart 1). Emerging-world growth will contribute twice as much as the developed world to global growth over this period.
  • By 2050, the emerging world will have increased five-fold and will be larger than the developed world (Chart 2).
  • 19 of the top 30 economies by GDP will be countries that we currently describe as ‘emerging’ (Table 3).
  • China and India will be the largest and third-largest economies in the world, respectively.
  • Substantial progress up the global league table will be made by a host of other emerging economies – most notably, Mexico, Turkey, Indonesia, Egypt, Malaysia, Thailand, Colombia and Venezuela.
  • These projections combine prospects for per capita GDP and the demographic outlook. Income per capita should grow in all the countries that we consider. But demographic patterns vary significantly across the world and have a major influence on growth prospects.
  • The US and UK, with better demographic outlooks, are relatively successful at maintaining their positions.
  • But the small-population, ageing, rich economies in Europe are the big losers.  Switzerland and the  Netherlands slip down the grid significantly, and Sweden, Belgium, Austria, Norway and Denmark drop out of our Top 30 altogether.
  • This may have implications for the ability of these economies to influence the global policy agenda.  Already Europe has been forced to concede two seats on the IMF’s executive board in order to make way for some emerging economies. This adds a whole new dimension to the current Eurozone crisis, and provides a significant incentive to euro-area countries to work through their current difficulties and remain a union.
  • Demographic change is even more dramatic outside of Europe. The working population will rise by 73% in Saudi Arabia and fall by 37% in Japan. That is reflected in these countries’ differing fortunes in our top 30 table (Chart 4).
  • By 2050, the seismic shift in the global economy will have only just begun. Despite a seven-fold increase (Chart 5), income per capita in China will still be only 32% of that in the US and scope for further growth will be substantial. This ‘base effect’ must be considered when comparing current growth in the emerging world with that of the developed world.
  • Energy availability need not hinder this path of global development so long as there is major investment in efficiency and low-carbon alternatives. Meeting food demand may prove more of a challenge, but improvements in yield and diet could fill the gap. In the final section, we discuss our preliminary thoughts on this topic.



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