The next few years will see a dramatic acceleration in the shift of global economic power eastwards, according to the latest predictions from The Conference Board, an international network of leading business figures.
It believes that the sluggish growth in the established economies of North America, Europe and Japan will result in their share of global GDP shrinking from around half today to a third by 2016. In line with other international bodies, such as the IMF and the OECD, the Conference board sees global growth returning next year, after the worst downturn in three-quarters of a century.
The Board says that the world economy will expand by 3.5 per cent in 2010, and growth will accelerate to more than 4 per cent in 2011. The current IMF forecast is for worldwide growth of 3.1 per cent next year, and during 2010-14, an average just above 4 per cent.
"Global growth will resume in 2010, with global output per head returning to pre-crisis levels," said Bart van Ark, chief economist, The Conference Board. "Looking further out, emerging and developing economies will account for a much larger share of the global pie – as much as two-thirds by 2016. And while China will surely be a major force in the unwinding of the crisis, we'll see other emerging markets increasingly fuelling global growth."
Indeed, the Board says that India's growth rate will overtake China's by the middle of the next decade, as China switches into a more mature, consumption-led pattern of growth. Because of the large systemic effects of the current global financial and economic crisis, with many Western banks unable to extend credit, the growth of potential output is likely to slow to 2.3 per cent in the United States, and to just 1.6 per cent in Europe and 1.4 per cent in Japan from 2011 to 2016, says the Board.
The Conference Board's Global Economic Outlook says: "We project China's economic growth at 8.5 per cent for 2010 and then see it gradually slow to 7.5 per cent after 2011. At 8 per cent from 2011 to 2016, India may, in fact, surpass China's growth rate, provided it finds a balance between increased export growth, domestic investment, and unlocking its large domestic consumption potential.
"Taking a medium-term perspective of about seven years", the Board adds, "the outlook becomes even more positive as global growth may get back on track to what it was in the seven years before the economic and financial crisis hit."
From 2011 to 2016, the Board's projections suggest that growth of the world economy may accelerate to 4.2 per cent. Global growth was 4.3 per cent on average in the boom years from 2000 to 2008.