World Markets of Tomorrow
James Waterson - June 2013
• 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
• 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
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.
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
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
long term growth of Europe
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.
- A growing proportion of national income diverted to transfer payments: mainly age
related (medical and pensions),
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.
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 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 .
America is not bereft of its own ageing population difficulties; 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.
the purposes of this analysis we estimate (conservatively) a growth rate of
2.5% per annum for the Americas.
presents a different problem. The big question is whether political structures
can continue to foster rapid growth.
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 than the 8-10%
rates seen over the past decade.
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
Philippines, Bangladesh, Indonesia, Malaysia, Vietnam and Thailand have become
fast emerging hotspots of growth with 5% average growth over the past decade. With 30% of
their population under the age of economic productivity, millions of
young people will continue to enter an already young workforce - becoming
tomorrow’s producers and consumers.
Increasingly strong educational frameworks will also be a positive force (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
and have increasing urban populations.
balance, an estimated GDP growth of 5% per annum seems reasonably conservative
for the coming decade in the Asia-Pacific region.
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
research completed by Morten Jerven for his book Poor Numbers vividly
illustrates the unreliability of African GDP and population figures.
GDP rebasing in Ghana saw a 60% increase in GDP. An early
estimate for Nigeria (which is currently undertaking the same exercise) predicts
a 40% increase in GDP.
This does suggest that much of African GDP data is underestimated due to the omission
of much of the informal and service sectors.
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
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
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.
following chart shows the likely trajectory of growth in the four continents
should these projections of growth become reality.
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, the American population
will grow slowly; and in Europe population growth will stagnate.
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
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.
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.
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
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.
future is very bright in the East – the world is rapidly becoming ever more
On almost any projection global growth will be
concentrated in Asia over the next few decades.
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.