Citigroup: US will be 3rd-largest economy by 2050
China will be on top by 2020, then India 30 years later, a Citigroup economist predicts. Where to invest? Try emerging markets.
China's will be tops by 2020. But China won't be there all that long either, according to Citigroup global chief economist Willem Buiter. India will have the biggest economy by 2050, he predicts.
Both countries are the world's fastest-growing economies. China predicts its economic growth will be 9% this year, BusinessWeek reports, while India's could hit 9.25%. The growth in India is so fast that officials are trying to figure out how to curb 9.4% inflation.
There's good news in this, Buiter wrote in a research report this week. The world, as CNBC noted today, is going to become richer and richer as developing economies play catch-up in coming years.
"As a result, world GDP should rise in real PPP-adjusted terms from $72 trillion in 2010 to $380 trillion dollars in 2050," he wrote.
As the world watches oil prices rise sharply amid unrest in the Middle East, Buiter's analysis of the world's long-term prospects offer some hope that better times are ahead, even if it means power will shift from the West to the East very quickly.
Developed economies have been struggling.
And the U.S. economy? Well, it plugged along at 2.8% in the last three months of 2010 and is forecast for 3.9% this year. But that was before oil prices rose on political violence in Libya and home prices slipped anew. There's also a possible government shutdown looming.
Buiter is no Pollyanna, however.
Growth will not be smooth. "Expect booms and busts," he wrote. "Occasionally, there will be growth disasters, driven by poor policy, conflicts, or natural disasters. When it comes to that, don't believe that 'this time it's different.'"
However, there are some easy wins for poor countries with big, young populations, he said.
"Developing Asia and Africa will be the fastest growing regions, in our view, driven by population and income per capita growth," he wrote. They will be followed by Middle East, Latin America, Central and Eastern Europe, the Commonwealth of Independent (including Russia, Ukraine and Belarus) and lastly the advanced nations.
"For poor countries with large young populations, growing fast should be easy: open up, create some form of market economy, invest in human and physical capital, don't be unlucky and don't blow it. Catch-up and convergence should do the rest," Buiter added.
Buiter ranked countries in terms of six factors that he calls Global Growth Generators. They include:
- Domestic savings and investment
- Demographic prospects
- Overall national health
- Educational progress
- Stable and transparent institutions and policies
- Trade openness
As Karen Maley noted on Business Spectator in Australia, all of these countries are currently poor, so their catch-up growth is likely to span decades. A number of them -- Nigeria, Mongolia, Iraq and Indonesia -- have abundant natural resources. And all except China enjoy favorable demographics.
According to the report, Mexico, Brazil, Turkey, Thailand and other countries would need to implement major adjustments, including raising domestic saving and investment rates substantially, to join Buiter's list. But the report said that those countries "need to achieve political transitions or transformations required to release their economies (and societies) from their decades-old straitjackets."
Kim Peterson contributed to this report.
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Folks we don't have to put up with the lack of response from elected officials. We COULD, if we would ratify amendments to the Constitution stripping THEM of pay and pension, voiding NAFTA, and placing HUGE tariffs on foreign made goods in order to force manufacturers to bring work back home.
We SHOULD (by such Amendments) set term limits on career politicians; eliminate pensions of elected officials; roll back their salary to 1990 levels and limit all future increases STRICTLY to the rate of inflation; reduce the size of Congress to 1 rep per state; and eliminate life time appointment of all judges and politicians to 10 years max same as the President. Tax breaks for corporate free loaders should also be eliminated and the Personal Income Tax eliminated on annual income less that $1-M. AND MOST IMPORTANTLY, MAKE ALL FEDERAL OFFICIALS INCLUDING CONGRESS SUBJECT TO ALL LAWS THEY PASS.
Unless we FORCE their hand by such Amendments, the economy will continue to falter and the rich will continue to get richer as they further decimate the middle class. The Tea Party is not the answer as they are just a tool (as is Faux News) of the ultra-rich wholly intended to keep the middle class divided and at each others throat.
Well what do you expect we ship our jobs to India and China then we wonder why our country's economy continues to go down hill. Yes the rich don't care about the rest of us because they control our government and ecomony.
The rich keep getting richer and the rest of us can go to hell is what they say. If we become a third world country we will truly regret letting the government allowing all those tax breaks for big business to ship all of our jobs out of the country.
Here's where I diverge from the majority of Americans who fundamentally subscribe to capitalism to the point of fanaticism as though Jesus himself was baptized in dollars with Benjamin Franklin's face imprinted on them, Americans have idealized corporations since WWII (when the US broke from the pack and lead the world-at least economically). And we have idealized corporations as American institutions, to the point where we defend them when our countrymen raise objections or concerns pertaining to them. These corporations have increasingly overtly demonstrated that their legal responsibility is to those who hold their stock and not to the advancement of the country in which they were once established. And maybe this is rightly so, but Americans should not then behave in a manner of aloofness or indignation when these companies who claim to bleed and defecate red, white, and blue, then decide to relocate their headquarters in Shanghai or Beijing. And Americans should not then adopt a mob mentality, and go after those who work from 9-5 and were daring enough to organize a union whereby the members of that union would receive an appropriate allocation of the American pie. I think our attention has negatively shifted from corporations who reimburse their CEO's with exorbitant amounts of money while laying off a significant population of America's workforce to those who are compelled from their sleep at 3,4, or 5 in the morning to work just so their kids don't go to school with stomach's that howl.
The article is a bunch of negative opinions and flaky assumptions. This is like the 1980's articles that said Japan was going to crush us economically. The writer of this article does not explain why the US would stagnate and China and India would have unlimited growth and prosperity.
China and India have massive problems - like over 600 million people in poverty and without even clean water. If the analysis doesn't include any of the things holding an economy back - it's just flaky propaganda.
It is ever so true "opinions are like aholes, everyone has one and they all stink" . We can speculate about the future all we want but most of the economic "thinkers" cant get tomorrow correct. Just yesterday they were justifying oil and stock prices on the rumor that Ghadafi was shot. With this being said, how are we supposed to figure out the world economy 40 years from now especially of two countries where in one they eat tiger penis to perform better and the other they let cows crap in the living room.
You know why is it a glass half full country that we live in. Even if this guys predictions are right the U.S. is still in solid third place economically. As others on here have said financial pendlums swing all the time. Where is this overwelming desire, that we Americans have, to be number one at everything. I would not live in China or India for their economics. America will be back on top again economically but lets not be greedy. Also I'll settle for third place if my country is safe and it's people are happy. Life is a series of ups and downs and as long as we don't fall to far down we'll be just fine. Now having said that our leaders need to focus on things to keep us at the top. Slipping to third is not horrible but I would say slipping to fifth would be a clear disaster. So when I write this it's not for our leaders and economist to become complacent. I hope the powers that be do what it takes to keep us on top economically and I hope we never fall so badly that our way of life is threatened. Good Day, Matt.
When you have a billion people, you can have a large economy and still be poor.
And wasn't Japan going to rule the world in the '90s?
Is anyone terribly surprised?
We have become of nation of whiners more concerned with being comfortable than with being productive and successful. Remember the old truism - you are not growing and learning when things are going well.
As long as our society and our Gov't is more concerned with equality of outcome vs equality of opportunity, we will GO BACKWARD. It is a harsh but (dare I use the term) inconvenient truth that life and our economy (as well as our schools, etc) has winners and losers.
Again, we have lost sight of that both in society and in government. Life is not fair. get over it, accept responsibilty and MOVE FORWARD!!!!!!!
If the American public would stop demanding everything be cheaper they wouldn't be in this mess.
consumer - "I want this T-shirt to cost me under $20"
manufacturer - "The only way that works is if we make it in China"
consumer - "I don't care where it comes from, only the price"
manufacturer - "Okay then, he's your cheap Chinese goods"
consumer - "Hey, where did all of our jobs go? Herp derp"
manufacturer - *facepalm*
China - "Thanks folks" *pockets money"
I don't care if we are the 100th largest economy. I would still rather live here than in any of the places mentioned in this article. With the smog in China and the filth in India I'll pass on these two. Not to mention wait until people in these countries demand greater wages and benefits - then they will be in the same boat as us - BROKE!
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[BRIEFING.COM] S&P futures vs fair value: -4.30. Nasdaq futures vs fair value: -9.30. The stock market is on track for a lower start as futures on the S&P 500 trade four points below fair value.
Index futures have retreated from their overnight highs following another round of disappointing data from China. This time, it was the Foreign Direct Investment report, which revealed a 1.8% decline (previous -0.4%), leading to concerns about a potential hard landing.
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