China set to become world’s largest economy by 2016, says OECD

9 Nov 12
China is on course to overtake the US as the world’s largest economy in as little as four years’ time, according to the Organisation for Economic Co-operation and Development.

By Nick Mann | 9 November 2012

China is on course to overtake the US as the world’s largest economy in as little as four years’ time, according to the Organisation for Economic Co-operation and Development.

In Looking to 2060: long-term growth prospects for the world, published today, the think-tank said the country’s fast-growing economy was also on track to be larger than the combined economies of the 17 eurozone countries by the end of this year.

India’s gross domestic product is projected to surpass Japan’s in the next year or so, before also overtaking the eurozone in about 20 years. Together, the OECD forecasts India and China’s combined GDP will exceed that of the Group of 7 leading economies by around 2025 – only 15 years after they together accounted for only half of the G7’s GDP.

Once the legacy of the global financial crisis is overcome, overall global economic growth over the next 50 years is expected to average out at 3% annually. But the OECD stressed sharp differences between the rapid growth expected to emerging market economies and advanced countries, which will see either slower or declining economic growth.

OECD secretary-general Angel Gurria said: ‘The economic crisis we have been living with for the past five years will eventually be overcome, but the world our children and grandchildren inherit may be starkly different from ours.

‘As the largest and fastest-growing emerging countries fully assume a more prominent place in the global economy, we will face new challenges to ensure a prosperous and sustainable world for all. Education and productivity will be the main drivers of future growth, and should be policy priorities worldwide.’

Increasing growth in emerging markets will be accompanied by improvements in living standards, the OECD said, with income per capita expected to more than quadruple in the poorest countries by 2060.

It noted, however, that cross country differences would still exist, with a forecast improvement in living standards of seven times or more in both India and China still leaving their per capita income at only 25% and 60% respectively of the leading countries in 2060.

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