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ECONOMICS


F


THE WORLD IN


48 businesslife.co February/March 2012


They may be the ‘minnows’ right now, but the economies of emerging countries look set to overtake those of the developed world in the not-too-distant future. HSBC’s Karen Ward peers into her crystal ball…


2050


OR THE NEXT few months, there’s no doubt that the eurozone crisis will continue to dominate the news. However, the time will come


when the drama will have finally played out and the dust settled, and we will be able to make a considered analysis of where things stand. One thing that the whole situation has demonstrated, not for the first time in history, is that the economic fortunes of even developed countries can rise and fall. And yet, while the current situation may


well go down in history as a rather fraught time for Europe, there is another far more dramatic tale to tell. It involves the seismic shift in the global economy that will see so-called emerging economies rising through the ranks to be world leaders. We are now entering a world where


global growth will be powered by emerging economies rather than being hindered by them. And by 2050, we anticipate that 19 of the 30 largest economies will be from the emerging world. What’s more, the collective size of the economies we currently deem ‘emerging’ will have increased five-fold and be larger than the developed world. In reaching this conclusion, we considered


a number of fundamental drivers of economic growth: the current level of development; the potential for emerging countries to match more developed ones; the quality of economic governance; and human capital. Human capital may sound rather cold, but


it is especially important when considering long-term growth projections. It’s a lot easier to grow when your working population is growing. Ageing populations, which are more of a problem in the developed world – Europe specifically – are a distinct drag on economic growth. By far the best region for available workers is Latin America, due to its reasonably high rate of fertility. Saudi Arabia, Egypt, Malaysia, India and Indonesia are also likely to see strong growth for the same reason. However, it’s not just about the size of


the population – productivity is also really important. This means the suitability and robustness of education and health services are critical. Education in the Asian economies in particular has made spectacular progress, and


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