The global economic order is expected to shift from advanced to emerging economies over the next few decades. Countries like Brazil, China, India, Indonesia, Mexico, Russia and Turkey are expected to grow at an annual average rate of almost 3.5 per cent over the next 34 years compared to just 1.6 per cent for Canada, France, Germany, Italy, Japan, the UK and the US. The former set of countries would comprise almost 50 per cent of world GDP by 2050 while the second set’s share would be just over 20 per cent.
China has already overtaken the US to become the world’s largest economy in purchasing power parity terms while India currently stands in third place and is projected to overtake the US by 2040. However, to realise this growth potential, emerging market economies need to implement structural reforms to improve macroeconomic stability, diversify their economies away from undue reliance on natural resources and develop more effective political and legal institutions.
Policymakers across the world face a number of challenges if they are to achieve sustainable long-term economic growth. Falling global trade growth, rising income inequality within many countries and increasing global geopolitical uncertainties are intensifying the need to create diversified economies which create opportunities for everyone in a broad variety of industries.