08 March 2015, Lagos – The latest report of PriceWaterHouseCoopers has said if Nigeria, Indonesia and Mexico are able to build institutions to global standards, diversify their economies and sustain growth friendly policies, their economies could push those of United Kingdom and France out of the top 10 by 20150.
PwC made this submission, being one of the key findings of the report titled: “The World in 2050: Will the shift in global economic power continue?”, in which PwC economists present long-term projections of potential GDP growth up to 2050 for 32 of the largest economies in the world, covering 84 per cent of total global GDP.
According to the report, the current global economic power shift away from the established advanced economies in North America, Western Europe and Japan will continue over the next 35 years – despite a projected slowdown in Chinese growth after around 2020. The world economy is projected to grow at an average of just over 3 per cent per annum from 2014-50 – doubling in size by 2037 and nearly tripling by 2050. But there’s likely to be a slowdown in global growth after 2020, as the rate of expansion in China and some other major emerging economies moderates to a more sustainable long-term rate, and as working age population growth slows in many large economies.
Nigeria, Vietnam and the Philippines are notable risers in the global GDP rankings in the long-term, reflecting relatively high projected average growth rates of around 4.5-5.5 per cent per annum over the period to 2050.
PwC Nigeria’s Chief Economist, who is a co-author of the report, Andrew S. Nevin, said: “Over the past decade, Nigeria has boasted superior economic growth and, with the right reforms and INVESTMENTS, Nigeria could become one of the world’s leading economies by 2030, with further progress by 2050. Nigeria’s potential advantages for future growth include a large consumer market, a strategic geographic location, and a young and highly entrepreneurial population.”
He added: “However, at the same time, we are all aware of the significant headwinds created by the rapid drop in the oil price, putting pressure on the fiscal and monetary systems, as well as reducing economic growth in the short term. To achieve its long-term economic potential, Nigeria will need to manage the oil price decline effectively at all levels of government and create a sustainable platform for diversification into the sectors that we know will drive the economy in the future – including power, agriculture, manufacturing, telecoms, hospitality and real estate.”
Also, Nevin noted: “Beyond Nigeria, we project that China will be the largest economy by 2030 on any measure. However, we also expect its growth rate to slow markedly after around 2020 as its population ages, its high INVESTMENT rate runs into diminishing marginal returns and it needs to rely more on innovation than copying to boost productivity. Eventual reversion to the global average has been common for past high growth economies such as Japan and South Korea and we expect China to follow suit.”
Meanwhile, the report also contains projections based on GDP at market exchange rates, without this relative price adjustment. On that basis, China is projected to overtake the US in around 2028, while India would clearly be the third largest economy in the world in 2050, but still some way behind the US.