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Last Updated:[12-01-2011 01:57:19 EDT] Zoom in Zoom out Back to Tradenews

Emerging Seven to Usurp G7 in a Decade

tradenews The latest reports by authoritative sources conclude the E7, lead by China and India will be larger than that of the G-7, the world’s largest industrialized markets in 2020. The reports published by PricewaterhouseCoopers, a leading accounting firm and HSBC, a top banking entity may not be astounding, but the faster pace of such an event.

The PwC using purchasing power parity (PPP) that factors price differences of same goods across countries to forecast GDP growth stated India could overtake Japan as early as 2011 and the US by 2050. Similarly, the accounting firm’s report, ‘The World in 2050’ also concludes China, which replaced Japan as the second largest economy last year, will overtake the US as the world’s largest economy by the end of this decade.

The PwC report further said “This renewed dominance of China and India, with their much larger populations, is a return to the historical norm prior to the Industrial Revolution of the late 18th and 19th Centuries - that caused a shift in global economic power to Western Europe and the US - this temporary shift in power is now going into reverse.”

On the other hand, the HSBC report finds apart from E7, Egypt, Malaysia, Thailand, Colombia and Venezuela will also enter the big league. While the US and UK, with better demographic outlooks, manage with their positions, aging economies such as Switzerland and the Netherlands slip down the grid significantly, and Sweden, Belgium, Austria, Norway and Denmark drop out of the Top 30 altogether, says the finding.

According to HSBC, the caveat to the projections is the closure of open borders followed by trade wars, bad political choices, and bad economic governance – which could easily upset the emerging market growth story. However, both reports did not mention about the ownership advantages of corporates from the developed countries.

The E7 includes China, India, Brazil, Russia, Mexico, Indonesia and Turkey whereas the G7 economies comprises of the US, Japan, Germany, UK, France, Italy and Canada.

By Jose Roy

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