Emerging Growth Poles Will Alter the Balance of Global Growth
The coming decades will see global economic growth increasingly being generated in emerging economies. By 2025, global economic growth will predominantly be generated in emerging economies. Although many high-income countries are only gradually recovering from the financial crisis, most developing countries have swiftly returned to their fast precrisis growth trend. China was one of the first economies to emerge from the crisis, and it returned quickly to around 10 percent growth. India experienced a stronger contraction, but also attained more than 10 percent growth in 2010, and the government is putting in place an ambitious new Five Year Plan (with improved policies and necessary investment programs) to keep growth at that level. Latin America sharply rebounded in 2010, after contracting sharply in 2009. Even Sub-Saharan Africa is expected to return quickly to almost 6 percent annual growth, similar to its performance in the years before the crisis. Even in the absence of such exceptionally high growth rates in the developing world, the balance of global grow. This expected to shift dramatically.
The changing role of developing countries will come with major transformations to their economies, corporate sectors, and financial systems. These changes are likely to occur in a wide variety of scenarios. The baseline scenario considered in GDH 2011—which is derived from longer term historical trends and from forward-looking components such as anticipated changes in demography, labor force growth, saving patterns, and educational levels—offers a lens into the possible transformations to come. This scenario envisions average growth over the next 15 years that will be substantially lower than the highs of 2010. However, emerging economies will still, collectively, expand by an average of 4.7 percent per year (more than twice the developed world’s 2.3 percent rate) between 2011 and 2025. (Given the considerable uncertainty underlying long-term growth projections, the baseline scenario includes error bands to emphasize the wide range of possible outcomes). By 2025, six major emerging economies—Brazil, China, India, Indonesia, the Republic of Korea, and the Russian Federation— will collectively account for more than half of all global growth. Several of these economies will become key drivers of global growth, alongside advanced economies. This new global economy, in which the centers of growth are distributed across both developed and emerging economies, is what GDH 2011 envisions as a multipolar world.