America’s days of economic dominance aren’t over just yet, but one international thinktank says it might come sooner than once thought. According to one group, China will have the biggest world economy by 2016.
The Organisation for Economic Co-operation and Development (OECD) out of Paris writes in a new report that China will be the world’s leading nation in terms of economy in just four years’ time, with other BRICs nations likely to usurp the current top dogs during the next few decades as well.
“The next 50 years will see major changes in country shares in world GDP,” the OECD report released this week reads. “On the basis of 2005 purchasing power parities (PPPs), China is projected to surpass the Euro Area in a year or so and the United States in a few more years, to become the largest economy in the world, and India is projected to surpass Japan in the next year or two and the Euro area in about 20 years.”
Additionally, the OECD predicts that China and India will together have a GDP that will beat out that of the G7 nations by as early as 2025, and by 2060 they expect Indian to out-perform the US on its own.
"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," said OECD Secretary-General Angel Gurria adds in an accompanying statement published with the report.
Asa Johansson, senior economist at the OECD, says, "It is quite a shift in the balance of economic power we are going to see in the future." According to projections published in the report, the United States’ share of the global gross domestic product will shrink to 18 percent in 2030, then 17 percent three decades later. Currently, the US is responsible for nearly a quarter, but by 2060, India is expected to have a slightly larger economy, generation 18 percent of the world’s GDP, as Japan and the Euro zone lose influence in international finances.
Last year, the US-China Economic and Security Review Commission predict that China’s yuan, or renminbi, could become the main reserve currency for the world economy within the next decade if it continues to rise up over the US dollar.
“Chinese economic dominance is more imminent and more broad-based – encompassing output, trade and currency – than is currently recognized,” economist Arvind Subramanian wrote last year. "By 2030, this dominance could resemble that of the United States in the 1970s and the United Kingdom around 1870. And this economic dominance will in turn elevate the renminbi to premier reserve currency status much sooner than currently expected.”