World Markets of Tomorrow

James Waterson - June 2013

By 2030
•   Asia Pacific to account for over 56% of world population and 52% of GDP
•   Americas to account for 14% of world population and 24% of GDP
•   Europe to account for 10% of world population and 20% of GDP
•   Africa to account for 20% of world population and 4% of GDP

By 2050
•   Asia Pacific to account for over 52% of world population and 64% of GDP
•   Americas to account for 13% of world population and 19% of GDP
•   Europe to account for 9% of world population and 12% of GDP
•   Africa to account for 25% of world population and 5% of GDP

The year 2030 sounds a long way in the future, but in reality it is only a little more than a decade and a half away. However, the changes that will almost inevitably take place over that period in geo-economic and geo-political terms are immense. Making very modest assumptions about economic growth, the world in 2050 becomes visible in outline (see chart 1 below), with profound implications for individuals, corporations and Governments.



Many of today’s politicians and commentators continue to believe that is vital to encourage rapid economic growth in Europe as the solution to debt and unemployment problems. However, looking at the long term data covering the past 50 years, the figures show that any expectation of growth in excess of 2% is simply wishful thinking.


Conversely the continuing growth well in excess of 2% seen in many emerging markets over the past decades looks likely to continue, resulting in the ever greater dominance of Asia in world affairs on any set of assumptions of economic and population growth.



GDP Growth assumptions by continent


The long term growth of Europe[1] over the last 50 years was approximately 2% per annum. There are good reasons for thinking that future growth will be at levels lower than 2%, including:


  • A rapidly ageing population, with fewer people of working age, leading to an increasingly unfavourable dependency ratio.[2]
  • A growing proportion of national income diverted to transfer payments: mainly age related (medical and pensions),[3] and social (disability and unemployment).
  • Already high total debt to GDP ratios (Sovereign, consumer and corporate) with onerous repayment levels, cutting the scope for economic growth.[4]

On the basis of these facts we assume a growth rate of no more than1.5% per annum is the most likely scenario for Europe over the next three decades.


The Americas

The Americas are likely to outperform Europe, mostly due to the better demographics and higher growth rates in the emerging markets of Latin America. The US historical GDP record (3.0%) is also better than Europe’s, but it must still contend with problems such as the rapidly rising medical costs and long term care for the rapidly expanding North American older population segment [5].


Latin America is not bereft of its own ageing population difficulties;[6] however, key countries such as Brazil with youthful populations are likely to benefit. The larger economies of Latin America have been growing at about 3.3% over the past decade and there seems little reason to believe they are unlikely to continue to grow at about that rate over the next few decades.


For the purposes of this analysis we estimate (conservatively) a growth rate of 2.5% per annum for the Americas.




Asia presents a different problem. The big question is whether political structures can continue to foster rapid growth.


On the basis of recent data it would seem that the twin giants of China and India are more likely to grow at a somewhat slower rate in future[7] than the 8-10% rates seen over the past decade.


World Economics has made the assumption that Chinese and Indian growth will slow towards more sustainable levels in the coming decades, but other large Asian countries will continue to grow at well over the 2-3% expected in developed economies.


The Philippines, Bangladesh, Indonesia, Malaysia, Vietnam and Thailand have become fast emerging hotspots of growth with 5% average growth over the past decade[8]. With 30% of their population under the age of economic productivity[9], millions of young people will continue to enter an already young workforce - becoming tomorrow’s producers and consumers[10]. Increasingly strong educational frameworks will also be a positive force[11] (over 90% of children in the above countries are enrolled in primary and over 68% in secondary school). In addition, these countries all have growing tertiary education enrolment[12] and have increasing urban populations.


On balance, an estimated GDP growth of 5% per annum seems reasonably conservative for the coming decade in the Asia-Pacific region.



Africa may grow rapidly as the political and economic situation stabilises further over the coming years. The strong growth in the region of 5% which has been seen over the past decade is definitely encouraging, although economic data are far from reliable.


Recent research completed by Morten Jerven for his book Poor Numbers vividly illustrates the unreliability of African GDP and population figures[13].


Recent GDP rebasing in Ghana saw a 60% increase in GDP[14]. An early estimate for Nigeria (which is currently undertaking the same exercise) predicts a 40% increase in GDP.[15]  This does suggest that much of African GDP data is underestimated due to the omission of much of the informal and service sectors.


With base years being so out of date, much of the data collected in GDP estimates will not take into account recent developments in mobile communication and information technology. It also further omits calculations of the shadow economy.


On balance, World Economics believe that continuation of 5% growth per annum does not seem unreasonable. This view is backed up by the Africa Sales Managers’ Index which suggests current growth in Africa in the region of 5-6%.



Global GDP in 2050

On the basis of the history of the past 50 years and the reasoning above we think it is sensible to make the assumptions previously referred to (Europe 1.5%, Americas 2.5%, Asia-Pacific 5% and Africa 5%) above.


The following chart shows the likely trajectory of growth in the four continents should these projections of growth become reality.




Population growth

Using UN population forecasts (medium-fertility variant), it can be seen that Asia is approaching the peak of its population growth; Africa is set to grow rapidly[16], the American population will grow slowly; and in Europe population growth will stagnate.


The same estimates show that by 2050 the Asia Pacific region will encompass over 4.4 billion people, or 55% of the worlds’ population. However, the majority of this expansion has already happened, with birth rates set to decline from 2020 onwards.


Africa will account for 25% of world’s population – making it the second largest market in the world in terms of sheer numbers of people, and over twice the size of the Americas. However, a key difference with the Asia-Pacific region is that growth in population size is not forecast to slow down, with African population still growing strongly in 2050.





GDP per capita

GDP per capita was calculated using real GDP figures calculated by World Economics (using World Bank, IMF and Penn data) and population growth data from the UN.


The Asia Pacific region will approach Europe and the Americas in per capita wealth terms by 2050. With the big increase in projected GDP, and population stability from 2030 onwards, this growth in wealth per head will accelerate between 2040 and 2050.


Africa will still be very much behind the rest of the world by 2050, with a GDP per capita of $8000 – roughly the same as the Asia Pacific region in 2011.  





The future is very bright in the East – the world is rapidly becoming ever more Asia-centric. 


On almost any projection global growth will be concentrated in Asia over the next few decades.

However, measured in per capita terms it will not be until the middle of the century that we see Asian wealth per person approaching European and American levels.



[1] For definition please see World Economics Global Growth Monitor

[2] The ONS published a 2010 report projecting a 66% increase in old-age dependency in the UK by 2051.

[3] A recent report by the Kings Fund found the UK could be spending 1/5th of GDP on the public provision of health and social care over the next 50 years.

[4] See Rogoff and Reinhart ‘This time is different’.

[5] Heritage figures report that up to 19% of US GDP could be consumed by Medicare, Medicaid and social security by 2050.

[6] The UN projects that the share of Latin America’s population that is aged 65 or over will triple by mid-century, from 6.3%in 2005 to 18.5% in 2050.

[7] See World Economics Global Growth Monitor, average of Chinese yoy growth between 2002-2012 at 10% and India yoy growth between 2002-12 at 8%.

[8] World Economics global growth monitor: ASEAN countries 5% average growth between 2002 - 2012

[9] For comparison: Germany’s economically inactive youth population is 15%

[10] World Economics research: Young population countries (unreleased) using World Bank data

[11] World Economics research using World Bank data

[12] As high as 48% in Thailand

[16] Note: Morten Jerven suggests that African population data may be as unreliable as it’s GDP figures