January 15, 2016
Prognos study Economy 2040 - Part 2: Forecast for the world economy
The study Economy 2040 is the only worldwide report in elaborating long-term future forecasts for 42 countries, representing 90 percent of the world’s economic performance. The study is conducted by Prognos AG. As a leading think tank for future-oriented studies, Prognos AG advises policymakers and businesses in Germany and Europe.
The future of the world economy
The world economy has lived through turbulent times. First, the global financial and economic crisis, then the European debt crisis left their marks on the economy. Prognos assert that both crises and the measures that were taken to counter them, will affect global economic developments in years and decades to come.
Medium- and long-term developments
In the long-run, the Prognos study predicts that the world economy will adjust to a slower growth rate. Prior to the crises between 1995 and 2007, the global GDP grew by an average of 3,2 percent per annum. By 2040 this rate is set to decrease to 2,7 percent.
China will account for a third of the worldwide economic growth by 2040, the USA will contribute 23 percent. The EU will be responsible for 17 percent, India for 8 and Brazil for 4. The main reason for the varying growth rates is the differentiated demographic developments, which will affect labor supply as well as demand. The USA also profit from the fact that the US-Dollar is set to remain the world’s leading currency, securing capital flow to the country.
China will continue to be the main driver of growth, even if it will not be able to achieve the dynamic of earlier years. China’s share in the global GDP will double from 10 to 21 percent. This makes it the second largest economy after the USA, whose share will decrease from 30 to 26 percent. Germany’s share will decrease from six to four percent, positioning it in fifth place.
In upcoming issues we will summarize the forecasts the study makes for Bavaria, Germany and the USA, and draw comparisons.