Americans fearful of losing their top economy ranking to China can breathe easy for at least the next decade, according to a new report.
According to the latest report from the London-based Centre for Economics and Business Research (Cebr), the world’s top three economies—the United States, China and Japan—are expected to keep their places for at least another decade, barring unforeseen economic mishaps and currency fluctuations.
Released on December 26th, Cebr’s World Economic League Table 2013 surveys 30 countries and gives the United States the top ranking in 2012 with an estimated gross domestic product (GDP) of U.S.$15.6 trillion, followed by China at $8.2 trillion, Japan’s $5.9 trillion and Germany’s $3.4 trillion annual output.Enjoying this article? Click here to subscribe for full access. Just $5 a month.
The top three are expected to retain their current placements through 2022, although China was forecasted to narrow the gap by producing 83 percent of U.S. GDP.
Asia’s rise is also evident from estimates that India will overtake the British economy in 2017 and surpass Germany as the 4th largest economy by 2022. By that year fast-growing Indonesia is predicted to move from the 16th to 10th biggest economy, with South Korea rising to become the 12th largest economy, up from its 2012 ranking of 15th.
Thailand is also seen as moving up in the rankings from 30th in 2012 to the 24th biggest economy in 2022, while Taiwan is expected to climb seven spots to 20th.
On the other hand, Cebr foresees resource-rich Australia, which became the world’s 12-largest economy in 2012, as falling behind South Korea and Italy over the next decade.
Overall, the report showed a downward slide for recession-hit Europe and the continued emergence of the BRICs and other emerging economies, including Brazil which is expected to hold the 5th spot by 2022 and Russia which will be the 7th largest economy by that time. The report’s biggest losers were France, which is forecasted to drop from 5th to 9th, and Italy, which is seen sliding from the 8th to the 13th biggest economy.
Commenting on the report, Cebr chief executive Douglas McWilliams said: “The Indians have lost to us at cricket this winter but they are on track to beat us at economics. By 2017 we predict that the Indian economy will be the largest economy in the Commonwealth, overtaking the UK economy.”
He added, “Cebr’s World Economic League Table shows the dramatic changes now taking place in the world’s economic geography with slow growing European economies falling back and Asian economies, even though their growth is slowing, catching up.”
Cebr’s findings contradict research by the Organization for Economic Cooperation and Development (OECD), which predicted in November that China would overtake the eurozone in 2012 and the United States within four years to become the world’s largest economy.
Based on purchasing power parity, the OECD said China would maintain the highest growth rate among the countries researched through 2020, but would then be overtaken by India and Indonesia.
Looking further ahead, the Paris-based think tank said by 2025, the combined GDP of China and India would be larger than the G-7 economies of the U.S., Canada, Germany, the UK, France, Italy, and Japan.
The U.S. National Intelligence Council (NIC) was slightly more optimistic on America’s prospects in its December report, Global Trends 2030, which predicted that China would probably surpass the U.S. as the largest economy in absolute terms a few years before 2030. The report went on to note, however, that by 2030 “Asia will have surpassed North America and Europe combined in terms of global power, based upon GDP, population size, military spending, and technological investment.”
Coming just before America’s temporary reprieve from the “fiscal cliff,” the Cebr report may renew skepticism that a so-called “Asian Century” will replace the past century of U.S. dominance.
Such is the view of the Carnegie Council’s Devin Stewart who, writing in The Huffington Post, said predictions of U.S. decline had proven misguided, citing Asia’s growing regional tensions, diversity and a lack of vision as proof to back up this time.
He noted: “China, Japan, and Singapore are often cited as possible models for emulation, but each presents its own problems.
“China has enjoyed rapid growth over the past decades but it is uncertain whether its state capitalist system can survive rampant corruption, popular protests, and environmental degradation.
“Japan is a leading Asian democracy but its recent elections have re-instated something closer to a one-party state than a pluralistic democracy.
“Singapore offers one of the best business environments in the world but to present a tiny city-state as a model for an Asian country like China is analogous to saying New York City could be a model for Brazil.”
Stewart added, “If an Asian Century means one in which Asian culture and politics dominate the globe, it won't be coming any time soon. Instead, for many decades to come, Asians will likely seek to increase their freedom and equality to accompany their growing prosperity – the universal values that define the American Century.”
Smooth transition or otherwise, Asia’s rise is still set to preoccupy policymakers well beyond the next decade.