Extending the forecast timeline from 2050 to 2075, Goldman Sachs Global Investment Research has successfully attracted attention with its forecast of the ranking of the global economy in the next 52 years. In this ranking 52 years later, Goldman Sachs predicts that the world’s largest economies will be China, India and the United States in turn.
Onlookers can’t help but calculate at what age they will witness the dramatic change in the ranking of this economy.
By adopting new data and new methods, the research targets of Goldman Sachs economists cover 104 economies. In 2035, China will surpass the United States to become the world’s largest economy. In 2075, India will surpass the United States again and become the world’s second largest economy.
In addition, the Goldman Sachs report also made predictions on world population growth, GDP growth in emerging markets and developed countries, and global income distribution.
China may overtake the US by 2035
Goldman Sachs Research believes that the period of the world’s fastest economic growth is gone forever. Economic expansion has gradually slowed as population growth has weakened. Some Asian emerging economies are expected to continue to catch up with and surpass developed countries, and the center of global GDP will shift more to Asia in the next 30 years. Among them, the biggest changes include that China may surpass the United States in 2035 and become the world’s largest economy; India may also continue to surpass the United States in 2075 and become the world’s second largest economy.
Going forward, growth in emerging markets will outpace that in developed markets, led by Asian economic powerhouses, despite slower real GDP growth in both advanced and emerging economies. The share of emerging economies in the global economy will continue to rise, and their income will gradually approach that of developed countries.
Goldman Sachs predicts that China will overtake the United States around 2035 to become the world’s largest economy. Some readers may be surprised by this forecast, but Goldman Sachs economists highlight three key factors behind it.
First, China has closed most of the gap with U.S. GDP, which has risen from 12 percent of U.S. GDP in 2000 to just under 80 percent today. Second, despite the sharp downward revision, Goldman Sachs economists still point out that China’s potential growth rate is still significantly higher than that of the United States, which is expected to be 4.0% and 1.9% respectively between 2024 and 2029. Finally, aside from potential growth differentials, Goldman Sachs expects that some of the actual overvaluation of the dollar relative to the renminbi may cease to exist in the next 10-15 years.
Using new data and a new methodology, Goldman Sachs has also extended the forecast horizon to 2075, 52 years later. At that time, China, India and the United States will be the top three economies in the world, which means that India will also overtake the United States at that time.
Interestingly, the potential GDP growth rate of the United States is expected to significantly exceed that of China in 2075 due to the more optimistic demographic outlook. Although the economies of China and India may surpass that of the United States by 2075, in terms of per capita GDP, the United States will still be more than twice as wealthy as China and India in 52 years.
In addition, in 2050, Goldman Sachs predicts that the world’s five largest economies will be China, the United States, India, Indonesia, and Germany; and in 2075, countries such as Nigeria, Pakistan, and Egypt may experience rapid population growth, which means that if policies and systems are in place, These countries are also expected to rank among the world’s largest economies.
Population slowdown weighs on global potential growth
Demographic trends are closely related to economic growth rates. Goldman Sachs predicts that in the next 10 years, the global economic growth rate will continue to decline, or slightly lower than the annual average of 3%. In the previous 20 years, the world economic growth has slowed down from an average annual growth rate of 3.6% in the decade before the global financial crisis to 3.2% in the decade before the COVID-19 pandemic.
The economic slowdown will have a relatively wide-ranging impact on both developed and emerging economies, mainly reflected in the impact of the slowdown in labor force growth on economic growth. In the past 50 years, the growth rate of the global population has been halved, from 2% per year to less than 1% at present. It is estimated that the growth rate of the global population will drop to close to zero in 2075.
China’s potential economic growth slows from 7.7% in 2010 to 2019 to 4.0% in 2024 to 2029, and will even drop to 2.5% in 2030 to 2039. Among them, the development trend of demographic structure is a major factor.
The strength of the US dollar may become history
Over the past decade, the relative performance of the United States among large advanced economies has been better than expected, making the United States uniquely the strongest economy in the world. But history shows that this situation is difficult to reproduce in the next decade. The potential growth rate of the United States is still significantly lower than that of large emerging market economies such as China and India. Goldman Sachs predicts that the extraordinary strength of the US dollar in recent years may cease to exist in the next decade.
Over the past 20 to 25 years, emerging market income convergence has led to a more equal global income distribution, and Goldman Sachs predicts this will continue. However, while income inequality between economies has fallen, inequality within individual countries has started to rise. And at the political level, it poses a major challenge to the process of globalization.
Protectionism and climate change present long-term risks to the world
Although the forecast timeline has been extended to 2075, Goldman Sachs admits that there is uncertainty in the future, especially in the further future. Regarding the risk factors affecting the future, the Goldman Sachs economic research team believes that protectionism and climate change will become important factors affecting global economic growth and income convergence.
According to Goldman Sachs assessment, so far the development of globalization has not yet reversed, but the risk of globalization reversal has clearly existed. Globalization has been a major force in reducing income inequality across countries, and greater efforts are needed to share its benefits more equitably within countries if it is to continue to do so.
Second, climate change is another big risk. In Goldman Sachs’ view, economic growth and environmental sustainability are not opposites, and many countries have been able to “decouple” economic growth from carbon emissions. But achieving sustainable growth requires a coordinated global response and economic sacrifices that are politically difficult to achieve.
This article comes from the “Finance Association” , reporter: Cheng Mengqi, 36 Krypton is authorized to publish. Original title: “The farthest forecast in history, Goldman Sachs gives the global economic ranking in 52 years: China surpasses the United States in 2035, and India jumps to the world’s second in 2075”
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