China projected to overtake US as the largest economy by 2017

Updated 07 February 2013
0

China projected to overtake US as the largest economy by 2017

The world economy is projected to grow at an average rate of just over 3 percent per annum from 2011 to 2050, doubling in size by 2032 and nearly doubling again by 2050.
China is projected to overtake the US as the largest economy by 2017 in purchasing power parity (PPP) terms and by 2027 in market exchange rate terms. India should become the third 'global economic giant' by 2050, a long way ahead of Brazil, which is expected to move up to 4th place ahead of Japan, according to a report by PricewaterhouseCoopers.
Russia could overtake Germany to become the largest European economy before 2020 in PPP terms and by around 2035 at market exchange rates. Emerging economies such as Mexico and Indonesia could be larger than the UK and France by 2050, and Turkey larger than Italy.
Outside the G20, Vietnam, Malaysia and Nigeria all have strong long-term growth potential, while Poland should comfortably outpace the large Western European economies for the next couple of decades, the PwC said in its report "World in 2050: The BRICs and beyond: Prospects, challenges and opportunities.
The PwC report updated its long-term global economic growth projections, which were last published in January 2011. These are based on a PwC model that takes account of projected trends in demographics, capital investment, education levels and technological progress.
“We can see that emerging economies tend to grow at 4 percent per annum or more, while advanced economies grow at around 2 percent or less — we will continue to live in a two-speed world economy for some decades to come as a catch up process continues,” the report said.
However, even in 2050 average income per capita will still be significantly higher in the advanced economies than in the emerging economies — the current income gap is just too large to bridge fully over this period.
The projected long-term growth trends pose many opportunities and challenges for businesses in the UK and other Western economies. China, India, Brazil and the other emerging markets highlighted in PwC study will become not just low cost production locations but also increasingly large consumer markets. At a time when trend annual growth is projected to be no more than around 2 percent in the advanced economies, companies seeking growth will need to look increasingly to these emerging markets. At the same time, such markets can be challenging places to do business. It will be important to understand and adapt to local rules, regulations and customs. The right entry strategy and, where appropriate, the right joint venture partner(s) will be crucial, as will good relations with local government and regulatory bodies. In some cases, the optimal production locations may not be the same as the largest consumer markets (e.g. investing in Malaysia, Indonesia or Vietnam as a gateway to China or India, or in Poland as a gateway to Russia). The report said there are also important challenges for governments, not least regarding natural resource constraints such as those relating to energy use and climate change.


OPEC oil ministers gather to discuss production increase

Updated 19 June 2018
0

OPEC oil ministers gather to discuss production increase

  • Analysts expect the group to discuss an increase in production of about 1 million barrels a day
  • The officials were arriving in Vienna ahead of the official meeting Friday

VIENNA: The oil ministers of the OPEC cartel were gathering Tuesday to discuss this week whether to increase production of crude and help limit a rise in global energy prices.
The officials were arriving in Vienna ahead of the official meeting Friday, when they will also confer with Russia, a non-OPEC country that since late 2016 has cooperated with the cartel to limit production.
Analysts expect the group to discuss an increase in production of about 1 million barrels a day, ending the output cut agreed on in 2016.
The cut has since then pushed up the price of crude oil by about 50 percent. The US benchmark in May hit its highest level in three and half years, at $72.35 a barrel.
Upon arriving, the energy minister of the United Arab Emirates, Suhail Al Mazrouei, said: “It’s going to be hopefully a good meeting. We look forward to having this gathering with OPEC and non-OPEC.”
The 14 countries in the Organization of the Petroleum Exporting Countries make more money with higher prices, but are mindful of the fact that more expensive crude can encourage a shift to renewable resources and hurt demand.
“Consumers as well as businesses will be hoping that this week’s OPEC meeting succeeds in keeping a lid on prices, and in so doing calling a halt to a period which has seen a steady rise in fuel costs,” said Michael Hewson, chief market analyst at CMC Markets UK
The rise in the cost of oil has been a key factor in driving up consumer price inflation in major economies like the US and Europe in recent months.
Already US President Donald Trump has called on OPEC to cut production, tweeting in April and again this month that “OPEC is at it again” by allowing oil prices to rise.
Within OPEC, an increase in output will not affect all countries equally. While Saudi Arabia, the cartel’s biggest producer, is seen to be open to a rise in production, other countries cannot afford to do so. Those include Iran and Venezuela, whose industries are stymied either by international sanctions or domestic turmoil. Iran is a fierce regional rival to Saudi Arabia, meaning the OPEC deal could also influence the geopolitics in the Middle East.