In what could be a tectonic shift in the global economic centre of gravity, the size of India's economy would grow to 90 per cent of the United States by 2050, with China becoming even bigger than the world's current largest economy, according to a PricewaterhouseCoopers report.
"The global centre of economic gravity is already shifting to China, India and other large emerging economies and our analysis suggests that this process has a lot further to run. Our latest projections suggest that China could overtake the US in around 2025 to become the world's largest economy and will continue to grow to around 130 per cent of the size of the US by 2050," it said.
India could grow to almost 90 per cent of the size of the US by 2050, PwC Head of Macroeconomics John Hawksworth said.
The global advisory firm projected that Brazil seems likely to overtake Japan by 2050 to move to the fourth place, while Russia, Mexico and Indonesia all have the potential to have economies larger than those of Germany or the United Kingdom by the middle of this century.
The report titled -- The World in 2050: Beyond the BRICs -- says that long-term prospects for China, India and other so-called E7 economies (Brazil, Mexico, Russia, Indonesia and Turkey) are still upbeat, but an additional 13 emerging economies also have the potential to grow significantly faster than the established Organisation for Economic Co-operation and Development (OECD) countries.
Interestingly, India has emerged at the top of the GDP growth table, ahead of China, prepared by PwC, which is likely to slow down till 2050.
India's gross domestic product (GDP) is currently growing at 8.5 per cent is expected to slow down to 5.8 per cent in 2050, but still ahead of other emerging and developed economies.
China's GDP is forecast to grow at 4.7 per cent in 2050 from 6.8 per cent in 2007. It is followed by Indonesia, which is expected to grow at 4.5 per cent by 2050 as against 6.7 per cent in 2007.
"Other emerging economies with relatively younger, faster-growing populations include Indonesia, Brazil, Turkey and Mexico. As with India, the key to them achieving the growth potential indicated by our mode would be establishing and maintaining a macroeconomic, legal and public policy environment conducive to trade, investment and hence economic growth," the PwC report said.
India is expected to move ahead of China in terms of growth in GDP due to several factors, mainly the significantly slower labour force growth in China due to the rapidly ageing population over the next 45 years, a result of its one-child policy.
While India's working age population is projected by the United Nations to continue to grow at a healthy rate.
Other factors favouring India is the fact that average productivity and education levels across the population are currently lower in India than in China, giving the former greater scope to catch up with the OECD countries in the long run, provided that it can maintain the right kind of institutional policy framework to support economic growth, the report said.
Besides, China's growth to date has been driven by very high savings and capital investment rates, but experience with Japan and other earlier Asian tigers suggests that such investment-driven growth eventually runs into diminishing returns once income levels approach OECD levels.
