Japan will continue to be the world’s third-biggest economy, in dollar terms, until the early 2030s when it would be overtaken by India, pushing Germany down from fourth to fifth.
According to a report by Reuters, think tank called the Centre for Economics and Business Research (CEBR) said China will overtake the United States to become the world’s biggest economy in 2028, five years earlier than previously estimated due to the contrasting recoveries of the two countries from the COVID-19 pandemic.
“For some time, an overarching theme of global economics has been the economic and soft power struggle between the United States and China,” the agency said in an annual report published on Saturday.
“The COVID-19 pandemic and corresponding economic fallout have certainly tipped this rivalry in China’s favour.”
China’s “skilful management of the pandemic”, with its strict early lockdown, and hits to long-term growth in the West meant China’s relative economic performance had improved, the CEBR has said.
China was keeping average economic growth of 5.7 per cent a year from 2021-25 before it will slow down to 4.5 per cent a year from 2026-30.
On the other hand, the United States was likely to have a strong post-pandemic rebound in 2021, its growth would slow to 1.9 per cent a year between 2022 and 2024, and then to 1.6 per cent after that.
Japan will continue to be the world’s third-biggest economy, in dollar terms, until the early 2030s when it would be overtaken by India, pushing Germany down from fourth to fifth.
Currently the fifth-biggest economy by the CEBR’s measure, the United Kingdom would slip to sixth place from 2024.
The CEBR also said the pandemic’s impact on the global economy was likely to show up in higher inflation, not slower growth.
“We see an economic cycle with rising interest rates in the mid-2020s,” the CEBR said posing a challenge for governments which have borrowed massively to fund their response to the COVID-19 crisis.
“But the underlying trends that have been accelerated by this point to a greener and more tech-based world as we move into the 2030s.”
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