China will overtake the US as the world’s largest economy in 2028: think tank

LONDON (Reuters) – China will overtake the United States to become the largest economy in the world in 2028, five years earlier than previously estimated due to contrasting recoveries in the two countries from the pandemic COVID-19, a think tank said.

“For some time, a comprehensive theme of the global economy has been the struggle for economic and soft power between the United States and China,” said the Center for Economic and Business Research in an annual report published on Saturday.

“The COVID-19 pandemic and the corresponding economic consequences have certainly put this rivalry in favor of China.”

CEBR said that China’s “skillful pandemic management”, with its early and strict blockade, and the impacts on long-term growth in the West mean that China’s relative economic performance has improved.

China seemed destined for an average economic growth of 5.7% in the year 2021-25, before decelerating to 4.5% in the year 2026-30.

Although the United States was likely to have a strong post-pandemic recovery in 2021, its growth would slow to 1.9% per year between 2022 and 2024, and to 1.6% thereafter.

Japan would remain the third largest economy in the world, in terms of dollars, until the beginning of 2030, when it would be overtaken by India, pushing Germany from the fourth to the fifth.

The United Kingdom, currently the fifth largest economy under the CEBR measure, would fall to sixth place from 2024.

However, despite the success in 2021 with its exit from the European Union’s single market, British GDP in dollars was projected to be 23% higher than France’s in 2035, helped by Britain’s leadership in the increasingly important digital economy. .

Europe was responsible for 19% of production in the top 10 global economies in 2020, but will fall to 12% in 2035, or less if there is a sharp division between the EU and Britain, CEBR said.

He also said that the impact of the pandemic on the global economy is likely to appear in higher inflation, not slower growth.

“We see an economic cycle with rising interest rates in the mid-2020s,” said the document, representing a challenge for governments that have made massive loans to finance their response to the COVID-19 crisis.

“But the underlying trends that have accelerated at this point towards a greener and more technology-based world as we move into the 2030s.”