Nigeria, Indonesia and Mexico could push the United Kingdom and France out of the top 10 economies of the world by 2050 if they are able to build their institutions to global standards and sustain growth friendly policies, a new report by the PricewaterhouseCooper has said.
The report, entitled ‘The world in 2050: Will the shift in global economic power continue?’ presents long-term projections of potential Gross Domestic Product growth up to 2050 for 32 of the largest economies in the world, covering 84 per cent of the global GDP.
According to the report, the current global economic power shift from the established and 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 over three per cent per annum from 2014 to 2050, doubling in size by 2037 and nearly tripling by 2050.
The PwC economists note in the report that a slowdown in global growth after 2020 is likely 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 to 5.5 per cent per annum over the period to 2050,” the report stated.
The Chief Economist, PwC Nigeria and co-author of the report, Mr. 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, he said, included a large consumer market, a strategic geographic location and a young and highly entrepreneurial population.
“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,” Nevin said.
Looking at long term projections, he said Nigeria could sustain an average growth of five to six per cent per annum.
He said while foreign investment had long been focused on the oil sector, portfolios were becoming increasingly diversified, moving towards power, agriculture and mining areas of the economy that had demonstrated a comparative advantage in emerging markets vis-à-vis the West.
Nevin however noted that rapid growth could not be guaranteed for emerging economies as indicated by recent problems in Russia and Brazil.
The PwC chief economist said, “Overdependence on natural resources could also impede long-term growth in countries such as Nigeria, Russia, and Saudi Arabia unless they can diversify their economies over time.
“In short, while our analysis confirms that emerging markets have huge potential, they can also be an institutional minefield – both managers and investors need to tread carefully. Overall, Nigeria continues to be an attractive place to invest not because it is an oil producer, but because of the immense size of its domestic market and the extraordinary commercial energy of its people, which remains largely untapped.”
According to the PwC, China will be the largest economy by 2030 on any measure, although its growth rate is expected to slow markedly after 2020 as its population ages.
“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,” he said.
China was projected to overtake the US by 2028, while India would clearly be the third largest economy in the world in 2050, but still some way behind the US, the report stated.
Punch
