1、Important disclosures appear at the end of this document.Dreaming With BRICs: The Path to 2050Dominic WilsonRoopa Purushothaman1st October 2003Global EconomicsPaper No: 99c110 Over the next 50 years, Brazil, Russia, India and Chinathe BRICseconomiescould become a much larger force in the world econo
2、my. Wemap out GDP growth, income per capita and currency movements in theBRICs economies until 2050.c110 The results are startling. If things go right, in less than 40 years, the BRICseconomies together could be larger than the G6 in US dollar terms. By 2025they could account for over half the size
3、of the G6. Of the current G6, only theUS and Japan may be among the six largest economies in US dollar terms in2050.c110 The list of the worlds ten largest economies may look quite different in 2050.The largest economies in the world (by GDP) may no longer be the richest (byincome per capita), makin
4、g strategic choices for firms more complex.EconomicResearch from theGS Financial Workbenchat https:/Many thanks to Jim ONeill, Paulo Leme, SandraLawson, Warren Pearson and our regionaleconomists for their contributions to this paper.Global Paper No 9921st October 2003SUMMARYc110 Over the next 50 yea
5、rs, Brazil, Russia, India and Chinathe BRICs economiescould become a muchlarger force in the world economy. Using the latest demographic projections and a model of capitalaccumulation and productivity growth, we map out GDP growth, income per capita and currencymovements in the BRICs economies until
6、 2050.c110 The results are startling. If things go right, in less than 40 years, the BRICs economies together could belarger than the G6 in US dollar terms. By 2025 they could account for over half the size of the G6. Currentlythey are worth less than 15%. Of the current G6, only the US and Japan ma
7、y be among the six largesteconomies in US dollar terms in 2050.c110 About two-thirds of the increase in US dollar GDP from the BRICs should come from higher real growth,with the balance through currency appreciation. The BRICs real exchange rates could appreciate by up to300% over the next 50 years
8、(an average of 2.5% a year).c110 The shift in GDP relative to the G6 takes place steadily over the period, but is most dramatic in the first 30years. Growth for the BRICs is likely to slow significantly toward the end of the period, with only Indiaseeing growth rates significantly above 3% by 2050.
9、And individuals in the BRICs are still likely to bepoorer on average than individuals in the G6 economies, with the exception of Russia. Chinas per capitaincome could be roughly what the developed economies are now (about US$30,000 per capita).c110 As early as 2009, the annual increase in US dollar
10、spending from the BRICs could be greater than that fromthe G6 and more than twice as much in dollar terms as it is now. By 2025 the annual increase in US dollarspending from the BRICs could be twice that of the G6, and four times higher by 2050.c110 The key assumption underlying our projections is t
11、hat the BRICs maintain policies and developinstitutions that are supportive of growth. Each of the BRICs faces significant challenges in keepingdevelopment on track. This means that there is a good chance that our projections are not met, eitherthrough bad policy or bad luck. But if the BRICs come a
12、nywhere close to meeting the projections set outhere, the implications for the pattern of growth and economic activity could be large.c110 The relative importance of the BRICs as an engine of new demand growth and spending power may shiftmore dramatically and quickly than expected. Higher growth in
13、these economies could offset the impact ofgreying populations and slower growth in the advanced economies.c110 Higher growth may lead to higher returns and increased demand for capital. The weight of the BRICs ininvestment portfolios could rise sharply. Capital flows might move further in their favo
14、ur, promptingmajor currency realignments.c110 Rising incomes may also see these economies move through the sweet spot of growth for different kindsof products, as local spending patterns change. This could be an important determinant of demand andpricing patterns for a range of commodities.c110 As t
15、odays advanced economies become a shrinking part of the world economy, the accompanying shiftsin spending could provide significant opportunities for global companies. Being invested in and involvedin the right marketsparticularly the right emerging marketsmay become an increasingly importantstrateg
16、ic choice.c110 The list of the worlds ten largest economies may look quite different in 2050. The largest economies in theworld (by GDP) may no longer be the richest (by income per capita), making strategic choices for firmsmore complex.The world economy has changed a lot over the past50 years. Over
17、 the next 50, the changes could be atleast as dramatic.We have highlighted the importance of thinkingabout the developing world in our recent globalresearch, focusing on key features of developmentand globalisation that we think are important toinvestors with a long-term perspective. A majortheme of
18、 this work has been that, over the next fewdecades, the growth generated by the largedeveloping countries, particularly the BRICs (Brazil,Russia, India and China) could become a much largerforce in the world economy than it is nowand muchlarger than many investors currently expect.In this piece, we
19、gauge just how large a force theBRICs could become over the next 50 years. We dothis not simply by extrapolating from current growthrates, but by setting out clear assumptions about howthe process of growth and development works andapplying a formal framework to generate long-termforecasts. We look
20、at our BRICs projections relativeto long-term projections for the G6 (US, Japan, UK,Germany, France and Italy)1.Using the latest demographic projections and amodel of capital accumulation and productivitygrowth, we map out GDP growth, income per capitaand currency movements in the BRICs economiesunt
21、il 2050. This allows us to paint a picture of how theworld economy might change over the decadesahead.The results of the exercise are startling. They suggestthat if things go right, the BRICs could become a veryimportant source of new global spending in the nottoo distant future. The chart below sho
22、ws that Indiaseconomy, for instance, could be larger than Japansby 2032, and Chinas larger than the US by 2041 (andlarger than everyone else as early as 2016). TheBRICs economies taken together could be larger thanthe G6 by 2039.Our projections are optimistic, in the sense that theyassume reasonably
23、 successful development. But theyare economically sensible, internally consistent andprovide a clear benchmark against which investorscan set their expectations. There is a good chance thatthe right conditions in one or another economy willnot fall into place and the projections will not beGlobal Pa
24、per No 9931st October 20032000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050UK USFrance Germany JapanG6Italy France GermanyItalyGermany JapanRussiaBrazilIndiaChinaBRICsOvertaking the G6: When BRICs US$GDP Would Exceed G6ItalyFrance*cars indicate when BRICs US$GDP exceeds US$GDP in the G6GS BRICs
25、 Model Projections. See text for details and assumptions.Germany1 Any decision to limit the sample of countries is to some extent arbitrary. In focusing on the G6 (rather than the G7 or a broader grouping), wedecided to limit our focus to those developed economies with GDP currently over US$1 trilli
26、on. This means that Canada and and some of theother larger developed economies are not included. Adding these economies to the analysis would not materially change the conclusions.realized. If the BRICs pursue sound policies,however, the world we envisage here might turn out tobe a reality, not just
27、 a dream.The projections leave us in no doubt that the progressof the BRICs will be critical to how the worldeconomy evolves. If these economies can fulfil theirpotential for growth, they could become a dominantforce in generating spending growth over the next fewdecades.A Dramatically Different Wor
28、ldWe start with some key conclusions that describe theway the world might change over the next 50 years.The big assumption underlying all of theseprojections is that the BRICs maintaingrowth-supportive policy settings. The chartsthroughout the text illustrate these points. Ourconclusions fall under
29、five main topics: 1) economicsize; 2) economic growth; 3) incomes anddemographics; 4) global demand patterns; and 5)currency movements.Economic Sizec110 In less than 40 years, the BRICs economiestogether could be larger than the G6 in US dollarterms. By 2025 they could account for over halfthe size
30、of the G6. Currently they are worth lessthan 15%.c110 In US dollar terms, China could overtakeGermany in the next four years, Japan by 2015and the US by 2039. Indias economy could belarger than all but the US and China in 30 years.Russia would overtake Germany, France, Italyand the UK.c110 Of the cu
31、rrent G6 (US, Japan, Germany, France,Italy, UK) only the US and Japan may be amongthe six largest economies in US dollar terms in2050.Economic Growthc110 India has the potential to show the fastest growthover the next 30 and 50 years. Growth could behigher than 5% over the next 30 years and close to
32、5% as late as 2050 if development proceedsGlobal Paper No 9941st October 2003010,00020,00030,00040,00050,00060,00070,00080,00090,000100,0002000 2010 2020 2030 2040 2050BRICsG62025: BRICseconomiesover half aslarge as the G6By 2040:BRICSovertakethe G6BRICs Have a Larger US$GDP Than the G6in Less Than
33、40 YearsGDP(2003 US$bn)GS BRICs Model Projections. See text for details and assumptions.BRICs Share of GDP Rises020,00040,00060,00080,000100,000120,000140,000160,0002000 2010 2020 2030 2040 2050G6 share ofcombined BRICsand G6 GDPBRICs share ofcombined BRICsand G6 GDP28%33%39%45%50%56%60%GDP(2003 US$
34、bn)GS BRICs Model Projections. See text for details and assumptions.The Largest Economies in 205005000100001500020000250003000035000400004500050000Ch US In Jpn Br Russ UK Ger Fr ItGDP(2003 US$bn)GS BRICs Model Projections. See text for details and assumptions.successfully.c110 Overall, growth for th
35、e BRICs is likely to slowsignificantly over this time frame. By 2050, onlyIndia on our projections would be recordinggrowth rates significantly above 3%.Incomes and Demographicsc110 Despite much faster growth, individuals in theBRICs are still likely to be poorer on average thanindividuals in the G6
36、 economies by 2050. Russiais the exception, essentially catching up with thepoorer of the G6 in terms of income per capita by2050. Chinas per capita income could be similarto where the developed economies are now(about US$30,000 per capita). By 2030, Chinasincome per capita could be roughly what Kor
37、easis today. In the US, income per capita by 2050could reach roughly $80,000.c110 Demographics play an important role in the waythe world will change. Even within the BRICs,demographic impacts vary greatly. The declinein working-age population is generally projectedto take place later than in the de
38、velopedeconomies, but will be steeper in Russia andChina than India and Brazil.Global Demand Patternsc110 As early as 2009, the annual increase in US dollarspending from the BRICs could be greater thanthat from the G6 and more than twice as much indollar terms as it is now. By 2025 the annualincreas
39、e in US dollar spending from the BRICscould be twice that of the G6, and four timeshigher by 2050.Currency Movementsc110 Rising exchange rates could contribute asignificant amount to the rise in US dollar GDP inthe BRICs. About 1/3 of the increase in US dollarGDP from the BRICs over the period may c
40、omefrom rising currencies, with the other 2/3 fromfaster growth.c110 The BRICs real exchange rates could appreciateby up to 300% over the next 50 years (an averageGlobal Paper No 9951st October 2003ChinaOvertakestheG3;IndiaIsCloseBehind050001000015000200002500030000350004000045000500002000 2010 2020
41、 2030 2040 2050ChinaIndiaJapanUSGermanyGDP(2003 US$bn)GS BRICs Model Projections. See text for details and assumptions.India Shows Most Rapid Growth Potentialof the BRICS0%1%2%3%4%5%6%7%8%9%2005 2010 2015 2020 2025 2030 2035 2040 2045 2050BrazilChinaIndiaRussiaGS BRICs Model Projections. See text fo
42、r details and assumptions.real GDPgrowth (%yoy)$521$1,594$4,517$1,137$656$47005001,0001,5002,0002,5003,0003,5004,0004,5005,0002010 2030 2050BRICsG6Annual increasein US$GDP(2003 $USbn)Incremental Demand Fromthe BRICs Could EventuallyBe Quadruple G6 DemandGS BRICs Model Projections. See text for detai
43、ls and assumptions.of 2.5% a year). Chinas currency could double invalue in ten years time if growth continued andthe exchange rate were allowed to float freely.How Countries Get RicherOur predictions may seem dramatic. But over aperiod of a few decades, the world economy canchange a lot. Looking ba
44、ck 30 or 50 years illustratesthat point. Fifty years ago, Japan and Germany werestruggling to emerge from reconstruction. Thirtyyears ago, Korea was just beginning to emerge fromits position as a low-income nation. And even over thelast decade, Chinas importance to the worldeconomy has increased sub
45、stantially.History also illustrates that any kind of long-termprojection is subject to a great deal of uncertainty.The further ahead into the future you look, the moreuncertain things become. Predictions that the USSR(or Japan) would overtake the US as the dominanteconomic power turned out tobebadly
46、 offthe mark.While this makes modeling these kinds of shiftsdifficult, it is still essential. Over 80% of the valuegenerated by the worlds major equity markets willcome from earnings delivered more than 10 yearsaway. Developing strategies to position for growthmay take several years and require sign
47、ificantforward planning. The best option is to provide asensible framework, based on clear assumptions.As developing economies grow, they have thepotential to post higher growth rates as they catch upwith the developed world. This potential comes fromtwo sources. The first is that developing economi
48、eshave less capital (per worker) than developedeconomies (in the language of simple growth modelsthey are further from their steady states). Returns oncapital are higher and a given investment rate resultsin higher growth in the capital stock. The second isthat developing countries may be able to us
49、etechnologies available in more developed countriesto catch up with developed country techniques.As countries develop, these forces fade and growthrates tend to slow towards developed country levels.In Japan and Germany, very rapid growth in the 1960sand 1970s gave way to more moderate growth in the1980s and 1990s. This is why simple extrapolationgives silly answers over long timeframes. As a crudeexample, assuming that Chinas GDP growthcontinued to grow at its current 8% per year over thenext three decades would lead to the prediction thatChinas
