World Economic League Table 2020
• The USA in 2019 reached 24.8% of world GDP, its largest share of the world economy since 2007. And the US is now expected to remain the world’s largest economy throughout the 2020s and is to be overtaken by China only in 2033, three years later than we forecast two years ago.
• We do not expect China to go into recession in 2020 and, although Chinese growth will slow as a result of demographics and greater concentration on quality of life, we expect China to become the world’s largest economy in 2033.
• India has decisively overtaken both France and the UK to become the world’s fifth largest economy in 2019. It is expected to overtake Germany to become fourth largest in 2026 and Japan to become the third largest in 2034. India is also set to reach a GDP of $5 trillion by 2026 – 2 years later than the current government target.
• The latest revised data suggests that despite Brexit, the French economy failed to overtake the UK economy in the 2016-19 period. We now expect that by 2034 the UK economy will be a quarter larger than the French economy.
• Two ‘Western’ economies with particular success in attracting skilled migrants, Canada and Australia, should continue to rise in the rankings. By 2034 Canada is predicted to be the 8th largest economy and Australia the 13th largest.
• Because of its success in diversifying into tech, Russia is expected to do far better than any other energy dependent economy in a world of weak oil prices, falling only one place from 11th to 12th by 2034.
• Korea is set to become one of the world’s top ten economies in 2027.
• Indonesia is set to be on the verge of entering the group of the world’s top ten economies by 2034, reaching 11th place in the table.
• Three rapidly growing Asian economies are the fastest risers in the table amongst the larger economies. The Philippines rises from 38th place in 2019 to 22nd place in 2034; Bangladesh from 41st to 26th and Malaysia from 35th to 28th.
• Poland enters the world’s top 20 economies in 2031, reaching 19th place.
• Weakening oil prices through the 2020s will push Saudi Arabia out of the world’s 20 largest economies by 2028, eventually sinking to 21st in the rankings by 2034.
The latest edition of the World Economic League Table, the WELT 2020, is produced by international economic forecasters, the London-based Centre for Economics and Business Research (Cebr) at a time of significant change in the world order and increasing global economic uncertainty. It is Cebr’s 11th annual world economic outlook report.
This edition of the World Economic League Table (WELT) shows some interesting moves as the world’s richest powers jockey for position.
The WELT tracks the size of different economies across the globe and projects changes over the next 15 years, up to 2034.
The past year, 2019, has been a bad year for the world economy with the weakest GDP growth since the recession year of 2009. But the clouds started to lift towards the end of the year and we predict that expansionary fiscal and monetary policy around the world will cause growth to accelerate in 2020.
In 2019, any lingering ‘feel-good factor’ from the upswing of the global economy in 2017 has largely dispersed and has been replaced by renewed volatility and uncertainty. Trade tensions have come to the fore with the US and China imposing substantial tariffs on each other’s export sectors.
Perhaps the most unexpected element in this report is the ongoing strength of the US economy, though we expect that 2019 will prove the high water mark as the problems of the trade war and the deficit impinge. But in 2011 the US economy was 21.2% of world GDP. In 2019 its share had risen to 24.8%, its highest share since 2007. And it is now forecast to remain the world’s largest economy throughout the 2020s, only being overtaken by China in 2033.
China, on the other hand, has had a particularly difficult 2019 with growth slowing and Beijing property prices falling. At the end of the year, however, growth seems to have started to recover and the prospects for 2020 are improving. Where China has been particularly successful is in reorienting policy – its success in virtually abolishing extreme poverty over the past two decades deserves to be applauded while the focus of policy has now shifted onto improved environmental performance. We still expect China to become the world’s largest economy in 2033.
Indian data revisions mean that 2019 was the year when the country’s economy finally overtook the UK and France (as predicted in WELT 2019). But slow growth during the year has increased pressure for more radical economic reforms. Our prediction that India will overtake Germany and then Japan to become the world’s third largest economy in 2034 assumes success in implementing such reforms.
In Europe, revised data means that even after the sharp fall in sterling after the Brexit referendum, the United Kingdom just managed to stay ahead of France. We now predict that by 2034 the UK economy will be a quarter larger than the French economy.
One of the persistent themes of this report is that countries that are successful in attracting skilled migrants tend to grow faster. And reflecting this, Canada and Australia, which are two of the most successful countries at attracting inward migration, are predicted to rise in the rankings, Canada to 8th and Australia to 13th by 2034.
We have had a chance this year to conduct an in-depth study of the prospects for the Russian economy. Our conclusion is that they are having some success in diversifying from energy to tech and as a result, despite our prediction of weak oil prices in the late 2020s and 2030s, we expect Russia only to drop one place in the rankings to 12th by 2034.
Poland is expected to join the ranks of the world’s top 20 economies, reaching 19th position in 2031.
In the long run, many Asian economies will rise through the ranks of the WELT as these countries cash in on their demographic dividends. The two most prominent examples are the Philippines, which will enter the top 25 largest economies reaching 22nd place in 2034, and Bangladesh, which will rise to 25th.
Cebr Deputy Chairman Douglas McWilliams said: “The World Economic League Table 2020 tracks relative economic progress. The biggest surprise is how well the US economy has managed to do, reaching its highest share of world GDP for 12 years. Though our view is that it has reached its high water mark and moving forward the deficit and its trade disputes will start to hold it back. Still, this is a remarkable performance for an old world economy. ”
“The battle for the top spots in the WELT league table remains fiercely contested,” said Kay Daniel Neufeld, Head of Macroeconomics at Cebr. He added: “In December, the US and China agreed on a de-escalation in trade tensions between the two economic juggernauts. Whether the conflict, which has been weighing heavily on global growth, can be entirely solved in 2020 remains to be seen. We expect growth in China to slow further throughout the year as the country manages not only the fallout from the trade war but also its transition towards a consumption-driven economy offering a higher standard of living. This has delayed its ascent to the top spot in the league table until 2033. Meanwhile, Japan, Germany and India will battle for third position over the next 15 years.”
“Despite the rapid ascent of countries such as India and Indonesia, it is striking how little an impact this will have on the US and China’s dominant roles in the global economy. Indeed, their share of world GDP is forecast to rise to 42% by 2034. The 2020s are set to be a decade marked by continued tensions between the US and China on multiple fronts ranging from trade to tech, which will cast a long shadow over the rest of the global economy.” said Pablo Shah, Senior Economist at Cebr.
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NOTES TO EDITORS
The World Economic League Table (WELT) is an annual calculation by Cebr jointly published by Cebr and Global Construction Perspectives. The base data for 2019 is taken from the IMF World Economic Outlook and the GDP forecast draws on Cebr’s Global Prospects model to forecast growth, inflation and exchange rates.
Please refer to this in copy when quoting as The World Economic League Table.
Cebr is a leading independent commercial economics consultancy based in London. The report has been produced by the Cebr team of economists led by Cebr’s Deputy Chairman, Douglas McWilliams.
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