The
Philippines and Peru are among emerging economies that would become much more
prominent in the next few decades, helped by demographics and rising education
standards, with the Philippines set to leapfrog 27 places to become the 16th
largest economy by 2050, according to a prediction of international bank HSBC.
The bank expected China to overtake the United
States as the world’s biggest economy by 2050, and said strong growth rates in
other developing countries would help drive the global economy.
"Plenty of places in the world look set
to deliver very strong rates of growth. But they are not in the developed
world, which faces both structural and cyclical head winds. They are in the
emerging world," the bank said in a
report “The World in 2050”.
HSBC based its forecasts on fundamentals such
as current income per capita, rule of law, democracy, education levels and
demographic change.
The bank said the Philippines would become a
“star performer” in terms of its
economic leap in the global rankings.
HSBC said the Philippines was likely to post
an average growth of 7 per cent in the next 40 years.
Breaking down the average growth forecast, the
bank said the country would likely grow by 8.4 per cent from 2010 to 2020, by
7.3 per cent from 2020 to 2030, and by 6.6 per cent from 2030 to 2040, and by
5.8 per cent from 2040 to 2050.
It said the advantage of the Philippines was
its favourable macroeconomic fundamentals and improving governance.
Economic officials of the government often
harp on what they call the country’s positive macroeconomic fundamentals that
include stable inflation, sustained growth over the years (it grew even when
the global economy shrank in 2009), stable banking and financial system, and
improving fiscal position.
Growing population a plus
HSBC said the Philippines was also put at an
advantageous position by its growing population, which, if properly educated
and trained, should help the economy generate more income over the next
decades.
The fact that the Philippines has relatively
low income gives it much room for growth, and that its favourable fundamentals
will help the country maximise that room, the bank said.
"The most potent recipe for growth is a
country that scores highly on the fundamentals discussed but currently has low
income per capita. These economies should deliver the highest growth in income
per capita as they ‘catch up’ with those with similar fundamentals," HSBC
said.
Top
20
According to HSBC’s forecast, the Top 20
largest economies by 2050 will be China, United States, India, Japan, Germany,
United Kingdom, Brazil, Mexico, France, Canada, Italy, Turkey, South Korea,
Spain, Russia, Philippines, Indonesia, Australia, Argentina and Egypt.
The Philippines’ 16th rank by 2050 in terms of
economic size marks a 27-notch improvement from its performance in 2010, said
HSBC.
The bank thus said that the Philippines was
expected to post the biggest leap in terms of economic ranking over the next
four decades.
"The Philippines looks set for a
multidecade run of strong growth," it said.
HSBC said Peru should average annual growth of
5.5 per cent over the same period.
The sheer pace of population growth in
countries such as Nigeria and Pakistan means that these economies will swell in
size to be included among the 100 biggest economies even if their incomes on a
per-capita basis remain low.
HSBC said lower scores for rule of law in
Latin America constrained its per capita income projections for the region
though it noted that Brazil was making headway in this aspect.
Losers
"The losers are the small population,
aging economies of Europe," added the bank, which said the demographics in
much of Europe underscored concerns about the debt problems faced by many of
the continent’s governments.
If sufficiently open to modern technology,
developing countries could enjoy many years of robust GDP growth although they
could struggle for growth drivers once they have adapted to technological
advances,
HSBC said.
"The initial years of development could
be described as ‘copy-and-paste’ growth, as countries open themselves up and
adapt to the world’s existing technologies. Once the ‘copy-and-paste’ growth is
complete…many economies struggle and get stuck in what is often known as the
middle-income trap."
"But many of the countries we are
considering are still at such an extremely low level of development that there
are years of this ‘copy-and-paste’ growth ahead," it added.
China
It was here that many of the pessimism about
China was misplaced, the bank argued.
"One of the most commonly cited reasons
for concern about China is the high rate of investment as a percentage of
GDP…(But) we believe the strong rate of investment is entirely
justified—providing China with much needed basic infrastructure," it said.
The bank said high levels of education in
Central and Eastern Europe meant that the regions could enjoy strong income per
capita growth in the coming years before weak demographics eventually sap
economic growth.
"While education rates are similar (to
the West), the average income per capita in the central and eastern Europe
block is just one fifth that of the developed world. For this reason…economies
have great scope to catch up in income per capita," HSBC said.
"Some of the smaller Eastern European
countries—Romania, the Czech Republic and Serbia—(should) all do extremely
well, particularly in the coming decade, before demographics prove to be more
of a drag."
Michelle V. Remo
Philippine Daily Inquirer
With a report from Reuters
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