Even as the developed economies struggle to kick-start growth, Standard Chartered global bank Standard Chartered has come out with a report that predicts a global economic Super-Cycle which they expect will last three decades.
What's a "Super-Cycle"?
The report defines a super-cycle as “a period of historically high global growth, lasting a generation or more, driven by increasing trade, high rates of investment, urbanization and technological innovation and characterized by the emergence of large, new economies.
There have been two previous Super-Cycles:
- The first Super-Cycle lasted 43 years from 1870 to 1913. This was the Industrial Revolution that led to rise of America and England and an unprecedented boom in global prosperity.
- The second Super-Cycle lasted 25 years from 1945 to 1970. This was the stunning rise of Japan and Germany as they recovered from the Second World War.
The report says that we are now in the third Super-Cycle. It began in 2000 and should last until 2030. It will be all about emerging markets (India, China, Indonesia, the Middle East, Africa and Latin America). The key difference is that while earlier super-cycles impacted a small portion of the population of the world, Super Cycle 3 will impact 85 per cent of the world population.
The Losers
Wealthy economies in North America, Europe and Japan will be biggest losers. Their share of global GDP will drop from 72% in 2000 to 29% in 2030. Although these countries will benefit from the growth in emerging markets, their economic clout will reduce substantially.
China, China, China
The biggest winner is China of course. The report predicts that the China's economy will be twice as large as the U.S. by 2030. In 2030 China will account for an astounding 24% of global GDP compared to just 9% now.
India will be the other major winner from this generation's Super-Cycle.
By 2012 India will be fastest growing economy in the world. (That's right, faster than China !!) Average annual GDP growth is expected to be 9.3% per year for the next two decades.
Optimistic? Unreal?
No, not really. In the last decade (2000 to 2010), in-spite of terrorist attacks, wars in Afghanistan and Iraq and an unprecedented Financial Crisis, the global economy has doubled growing from $32 trillion in 2000 to $64.7 trillion in 2010. Global trade has also recovered to pre-recession levels.
Want to read more?
The report is available as a free download on Standard Chartered's website.
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