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A report published by leading consulting firm PricewaterhouseCoopers (PwC) points to a significant tectonic shift in the global economy in the years leading up to 2050 - China will supplant the US as the world's largest, and Russia will rise to supremacy in Europe.

The report, The Long View, ranks 32 countries based on their projected 2050 GDP by Purchasing Power Parity, finding China's GDP would reach US$58.5 trillion, India US$44 trillion, and Russia US$7 trillion. PPP was used as many experts consider it as a more precise way of estimating a country's economy, as it compares different currencies through a market-based "basket of goods" approach to determine economic productivity and standards of living.

Moreover, the authors considered three key underlying factors human capital (working age population growth), physical capital (investment in capabilities and education) and technological capital (innovation growth).

According to PwC's modeling, many developed market economies will lose steam to the emergent E7 grouping of Brazil, China, India, Indonesia, Mexico, Russia and Turkey, which will grow by an average of 3.5 percent annually. By comparison, the advanced G7 nations of Canada, France, Germany, Italy, Japan, the UK and the US will grow by a mere 1.6 percent. The E7 is already bigger than the G7, and by 2050 could account for half of the world economy by contrast, the G7 could be down to under a quarter.

Frontier economies such as Vietnam, the Philippines and Nigeria are expected to grow by an average of 5 percent annually, taking the largest strides up the GDP rankings of all economies. The US will lose global dominance by 2030, and China will only continue to grow. While these projections were based on current assumptions, and subject to unforeseen headwinds and tailwinds, John Hawksworth, chief economist for PwC, told Sputnik there was every reason to believe the rise of the BRIC countries (Brazil, Russia, India and China), ongoing for decades, will continue apace. He foresees Russia's economy overtaking Germany in size by 2030, for instance.

"Russia has great people strengths, with a well educated, entrepreneurial population highly skilled in new technologies. It's a matter of diversification away from natural resources, towards emergent tech. Russia should capitalize on those key assets, and make the country an attractive place for top talent from China and India to establish themselves in," Hawksworth told Sputnik in February 2017.

While other economic reports have offered dire warnings about the threat to jobs and entire industry sectors posed by robotics, Hawksworth is more circumspect about the risks, and more optimistic about their potential. "Robots will destroy jobs in some areas, while creating new opportunities in others. We previously published a study showing 10 percent of the jobs in London were digital roles that didn't exist 20 years previously. There are great jobs to be had in new areas, and robots can create new forms of income, creating demand for existing and new services alike. We shouldn't see robots as destructive that's a very one-sided view," he added.

Hawksworth does see potential downside risks in the growth of protectionist economic policies. "What drove economic growth in the post-war period was free trade since the financial crisis, we've seen backwards steps on that, and a slowing of global trade. We can rhetoric around that in the US and elsewhere at the moment, but a nationalistic approach to trade would be very bad it's the free flow of ideas, tech and people around the world that drives growth," he concluded.

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Page last modified: 18-02-2017 18:10:11 ZULU