The Global Economy: The Present and the Future

The Voronoi diagram below (Figure 25) represents the relative size of the economies responsible for the greatest economic output in terms of nominal GDP as measured in 2014, and their economies’ sectoral distribution (agriculture, industry, services).

The United States is the biggest player of the global economy, accounting for 23.32% of it and featuring an economic structure that is predominated by services: 79.7% of its companies represent the sectors in this field, compared with the global average of 63.6%. Meanwhile, agriculture and industry make up smaller-than-average portions of the economy, 1.12% and 19.1%, respectively, compared with global averages of 5.9% and 30.5%. We can also see that in absolute terms, the US still has the largest industrial sector in the world.

The world’s second-largest economy, China (13.9%), is more balanced in terms of its sectoral distribution, although the service sector is currently growing at a rapid pace. The main difference of its economic structure compared to higher-income countries is agriculture’s above-average, 9.1% contribution, and the fact that its industry and agriculture together contribute more to its economic performance than services. But services will become increasingly predominant in China’s growth structure, fostered by the development directions of its 13th Five-Year Plan (2016–2020) announced in late 2015, which introduced a new growth model for the country. This will entail structural transformations in the economy, with the declared objective of increasing the contribution of services and consumption to GDP and, according to Chinese Premier Li Keqiang’s announcement in early 2016, reducing excess capacities in industries exhibiting overproduction. This will no doubt result in a decrease of agriculture’s share within the economy. The growing contribution of services to GDP is also emerging in India, coupled with an expected decrease in the contribution of agricultural sectors.

Figure 25 The Most Advanced Economies Based on the Distribution of Countries’ GDP

Source: HowMuch.net

 

The Future of the Global Economy: The Economy Will Quintuple by 2045

According to the analysis of the British Ministry of Defence’s economic department,59 the size of the global economy will expand to several times its 2012 value by the year 2045. This development will predominantly be driven by China, the US, India and the European Union. In the EU, Great Britain will expand the most compared to the 2012 figure by 2045, by nearly 86.9%, followed by France’s 72.7% and Germany’s 46.8%. China will see its economy quadruple, the US will experience an expansion of 95.5%, India will show a 4.5-fold increase, and the EU will grow by 75.7%. Among developed countries, Japan will expand the least, by 45%, Canada will grow 1.2-fold and Australia 1.5-fold. Russia and Saudi Arabia will see their economies expand at roughly the same rate by 2045, to 1.6 times and 1.55 times the 2012 figure, respectively (Figure 26).

According to the estimates, Ethiopia, Nigeria, Egypt and Kazakhstan have the potential to exhibit the greatest growth rate, while other highgrowth countries as compared to the 2012 figure include Indonesia, Turkey, Chile, Algeria, South Africa and Mexico.

Figure 26 GDP per capita Growth in 2000–2015

Source: World Bank – UNDP - New Economics Foundation, Peter Aldhouse

 

The Most Robust Economies

The world’s largest economies (based on nominal GDP) in 2015 were the United States, China, Japan, Germany, the United Kingdom, France, India, Italy, Brazil and Canada. Interestingly, while the US ranks first based on nominal GDP, it only ranks 11th based on income per capita. Meanwhile, China continues to exhibit the highest growth rate among the top economies. Although Japan, which ranks third based on nominal GDP, may be seeing a slowdown in its economic expansion, it still ranks high in global comparison in terms of purchasing power parity, being the fourth economy in this respect. It also ranks fourth based on export output. Germany is the fourth largest economy, ranking fifth at purchasing power parity, second based on exports and third based on product imports (Figure 27).

Figure 27 The World’s 10 Economic Superpowers

Source: Healy Consultants, Visually

Based on these data, the British economy is the second largest in Europe. It is the fifth largest globally based on nominal GDP, and the eight largest in terms of its economic output measured at purchasing power parity. France has the sixth highest nominal GDP on a global scale, and the third-highest in Europe. India ranks seventh based on nominal GDP, and, interestingly, ranks third globally at purchasing power parity. After the economic reforms adopted in 1991, it has become one of the fastest-growing economies in the world. Italy is the 24th most advanced economy globally, but it occupies the eight place among the top economies thanks to its relatively low unemployment and high income per capita. Brazil ranks ninth based on nominal GDP and seventh at purchasing power parity. Canada comes in tenth based on nominal GDP and 13th at purchasing power parity.