A recent report from Goldman Sachs has unveiled a remarkable projection: a significant shift in the balance of global economic power over the coming decades. According to analysts, Asia, led by China and India, is poised to potentially outshine the conventional economic giants grouped within the Developed Markets (DM) category, altering the landscape of world GDP contributions.
In a visually striking representation of Goldman Sachs’ real GDP forecasts for 2050, a voronoi diagram illustrates this transformative shift. The projections suggest that Asia, excluding Developed Markets, will account for a substantial 40% of the global GDP share, narrowly edging out Developed Markets’ anticipated 36%. This stands in stark contrast to the scenario half a century ago in 2000 when Developed Markets represented a dominating 77% of global GDP.
Delving into the Asian perspective, China and India are expected to drive the majority of the region’s GDP in 2050. However, it’s noteworthy that China’s growth will have decelerated considerably by then. Goldman Sachs anticipates China’s annual real GDP growth to average a surprisingly modest 1.1% throughout the 2050s, compared to America’s projected 1.4% annual growth in the same period.
The standout performers in Asia during the 2050s are forecasted to be India (with an impressive 3.1% annual growth), Bangladesh (3.0% annually), and the Philippines (3.5% annually). These countries are poised for success due to their high population growth rates and relatively young median age, translating into a larger and dynamic workforce.
Challenges in Latin America
Shifting our focus to Latin America, the region is anticipated to contribute a relatively modest 7% to the global GDP by 2050. In light of Goldman Sachs’ previous projections from 2011, it’s evident that several Latin American countries have struggled to meet expectations over the past decade. For instance, Brazil’s real GDP dwindled from $2.7 trillion in 2010 to $1.5 trillion in 2020.
Given these setbacks, Goldman Sachs believes that Indonesia is poised to surpass Brazil as the world’s largest emerging market before 2050. However, Brazil’s economic ranking is still projected to surpass that of France and Canada by that time, contingent on the accuracy of these forecasts.
The Goldman Sachs report underscores the monumental economic transformations on the horizon, with Asia poised to redefine the global economic landscape, and Latin America grappling with challenges that could reshape its position in the world economy.
By Impact Lab