China will overtake the United States as the world’s largest economy before the end of the decade, after beating its rival during the Covid-19 global pandemic, according to a report.
The Center for Economics and Business Research said it now expects the value of China’s economy, when measured in dollars, to exceed that of the United States in 2028, half a decade earlier than expected a year ago.
In its annual growth prospects ranking table for 193 countries, the UK-based consultancy group said China quickly recovered from the effects of Covid-19 and would grow 2% in 2020, as the only major global economy to expand.
With the US forecast to drop 5% this year, China will narrow the gap with its biggest rival, CEBR said. Overall, the global gross domestic product is expected to fall 4.4% this year, the biggest drop in a year since World War II.
Douglas McWilliams, vice president of CEBR, said: “The big news in this forecast is the growth speed of the Chinese economy. We expect it to become a high-income economy during the current five-year plan period (2020-25). And we expect it to surpass the US five years earlier than a year ago.
“Other Asian economies are also moving up the league table. A lesson for Western lawmakers, who performed relatively poorly during the pandemic, is that they need to pay much more attention to what is going on in Asia, rather than just looking at each other. ”
China’s share of global GDP increased from 3.6% in 2000 to 17.8% in 2019 and will continue to grow, said CEBR. This would exceed the per capita limit of $ 12,536 (£ 9,215) to become a high-income country in 2023.
Even so, living standards in China will remain much lower than in the United States and Western European countries. In the USA, the average per capita income is just over $ 63,000, while in the UK it is just over $ 39,000.
CEBR said that leaving the EU would not prevent the UK – probably the fifth largest economy in the world in 2020 – from being one of the best performing economies in the next 15 years.
“We expect the growth rate trend for the UK to be 4.0% per annum for 2021-25 and 1.8% per annum for 2026-30 and 1.8% per annum for 2031-35,” he said. consulting.
“The United Kingdom is expected to be overtaken by India in 2024, but on the other hand it maintains its place on the league table until 2025. In 2035, the UK’s GDP in dollars is expected to be 40% higher than that of France, its rival longtime and neighbor. “
India, after overtaking France and the UK last year, lagged behind the UK as a result of a sharp drop in the value of the rupee. But the drop will be short, with the second most populous country in the world on its way to being its third largest economy by 2035.
CEBR said that environmental issues will begin to have a serious impact on the shape of the world economy in the next 15 years, after a period when the effects of global warming became apparent more quickly than previously feared.
“The sea level is expected to have risen 45 cm from the base of 2,000 by 2035. This compares with the smaller 20 cm increase in 2030 predicted two years ago.”
With more countries making plans to transition to a net zero carbon economy in the coming decades, CEBR said there would be weaker demand for fossil fuels and lower oil prices. The cost of a barrel of crude oil would drop to less than $ 30 in 2035, the agency said.