In its new report, Looking to 2060: A Global Vision of Long-term Growth, the OECD has announced that China’s economy will surpass the combined economies of the European Union (EU) Member States in a year.
By 2016, China is also expected to overtake the United States (U.S.) and become the largest economy in the world.
Some argue that China becoming the biggest economy is not problematic, because it does not require or imply the U.S. decline. It could in fact mean that not only China, but the U.S. become richer, and that more people could gain access to better living standards.
The OECD report nevertheless points out that the rapid growth of so-called developing countries will shift dramatically the balance of the global economic power over the next half of century, as these countries will account for an increasingly large share of global output.
Global GDP is expected to grow by 3% over the next 50 years, but with large variations between emerging-market economies, which are expected to grow at a much faster pace, and the advanced countries, likely to grow at slower and often declining rates.
By 2025, the OECD report anticipates that China and India’s combined GDP will exceed that of the major seven (G7) OECD economies. By 2060, the Indian economy is also expected to become larger than the U.S. economy. At the same time, the per capita income in China and India will undergo a seven-fold increase, while the per capita income in the poorest countries will quadruple and double in the richest countries.
Nevertheless, global inequalities will persist, given that the living standards in the emerging countries will still be 25%-60% of level enjoyed in the U.S and other so-called advanced economies.
While rising global imbalances could undermine growth, the report claims that they can be reduced through the adoption of structural reforms and fiscal consolidation.
OECD top officials acknowledge that the forecasts contained in the report are not set in stone and that there can be in fact unexpected variations resulting from global or national political and socio-economic changes.