America's Economy Still #1...For Now
Image Credit: Wikicommons

America's Economy Still #1...For Now

0 Likes
16 comments

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.

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.

Comments
16
angelus512
January 9, 2013 at 11:02

That China will take #1 GDP spot in time is without question basically (barring any freaky technological developments or breakthroughs in the US or war that could alter said situation).
Having said that with 1 billion+ people is it really so surprising? 
On the other hand I (and this article it seems) would contend the question is not solely about who has the largest GDP, its rather a more relevant question as to who has leadership.
I think American leadership barring unforeseen catastrophies is essentially assured to continue for an unforseen (read infinite) point of time.
Why? Because nobody wants to follow China quite frankly and Asia represents a patchwork of antagonistic states with no cohesive collective agenda beyond picking on each other.
The intense and deep rivalries and nationalist hatred of each other in Asia is so strong and endured for such a length of time that I don't see American leadership being replaced by anybody in our lifetimes.
The only alternative is the EU but they are so far behind that possibility I don't see that as likely either but as an example the EU is a lot closer to global leadership than "Asia".
Asia will have lots of people and money etc but that doesn't equal leadership considering none of them like each other etc.

angelus512
January 9, 2013 at 10:56

Anon? Is that you?
I don't believe it. The words you posted by comparison to some of your other posts.
Wow..

Oro Invictus
January 9, 2013 at 05:45

 
@anon
 
 
I'd agree insofar that compared to the apex states of any other epoch, the US has definitely been the most benign. Still, Iraq was a case-in-point that the US' position as the "lesser evil" is still that, "evil" (if you'll forgive the term). Sadly, there are currently no better alternatives, and it is with the bitterest sense of gladness that I view the various projections that state the US isn't going to lose it's overall primacy for the foreseeable future. 

Anon
January 8, 2013 at 19:07

More people have brought themselves out of poverty under the US' benign global leadership than at any other point in history, and more people are have representative governments than at any other time in world history.
I'd say the US overall has been pretty damn good for not just the global economy, but for increases in standards of living and representation the world over, despite what you think of the War in Iraq.
 

EAM
January 8, 2013 at 14:47

These measurements appear to be based on nominal GDP numbers. The PPP based numbers are quite different and I think are regarded as more accurate (as used for example by the CIA on its factbook site). The PPP numebrs from the CIA give the current ranking as USA, China, Japan, India, Germany, Russia, Brazil, UK and France. The World Bank rankings are the same expect that India and Japan swap places.
http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)

Drive by
January 8, 2013 at 14:31

On the base of PPP, China is probably already the largest economy now. However China has a low per capita GDP, indicating an enormous potential for further development.

Zarathustra
January 8, 2013 at 12:15

Such insightful reasoning.

ImperiumVita
January 8, 2013 at 12:12

You don't have to believe it; as you clearly don't understand it. 

Dr No
January 8, 2013 at 12:12

You're right. The number one priority for the United States now should be to destroy the Federal Reserve. I don't know what money supply system they should take instead, those with more experience of macro economics could probably answer that.

Oro Invictus
January 8, 2013 at 11:57

It’s generally a bad idea of accusing others of conjecture before engaging in it yourself; this is particularly so if the other group actually has quite a bit of data supporting their predictive models.
 
Likewise, given the concerned nations, it is also probably a bad idea to base said conjecture off the claim that US politicians are “behav[ing] like the Emperor Nero” (to be fair, the wealth of most US politicians is, quite frankly, appalling); considering that the private wealth of the PRC’s standing committee (at least, the known wealth, which is likely much lower than the actual wealth) is essentially an order of magnitude greater than that of the combined US Congress… Well, neglecting to mention that matter makes one seem guilty of issuing “raw bs”.
 
All that said, I respond here less because anything you say is really unusually foolish (there are, sadly, more such commentaries here is both number and degree of egregiousness), but that I suspect there will be others ready to echo such sentiments and I’d rather just point out the flaws of such things early and be done with it. Hopefully, this will also ward off others who would react to your statements less level-headedly and more negatively than I.

indiaWatcher
January 8, 2013 at 10:02

Many thanks for highlighting this joke. The American century was all about black ops, little to do with freedom and equality. As far as the Amercian Century is concerned, the only thing free or equal were the horrible consequences resulting from the AIDS epidemic that broke out in the U.S. in the early 1980s. That was totally free of charge and the great equaliser of the american century.

indiaWatcher
January 8, 2013 at 09:54

In the coming ten to twenty years, India will overtake the Euro powers and even Japan because both these places are locked in an ever downward going spiral since Euro countries like Greece and Spain are virtual bottomless wells while Japan's domestic situation is unlikely to become any better. The US will be drownng in a sea of debt. Thus India will overtake these countries and possibly attain number two status in the world.

2013 best joke
January 8, 2013 at 09:40

This is the best joke I have heard – "freedom and equality…the universal values that define the American Century".

Lnrds
January 8, 2013 at 08:02

The problem is again with the Federal reserve, it will self destruct and there will be a point there they won't be able to print any more money.
 
 
All America has to do is either
1) end the FED 
2) point 1 probably won't happy but at least limit the reliance on it and issue other form of currency. .
3) Cut spending, not future proposed spending, actual cuts! particularly military spending and foreign aid.
All America has to do is cut spending and create more jobs and they can maintain the number 1 spot. There is still hope they can do this even if the FED controls the country but either way if nothing is going to get done, then the people will fight back and restore America to its former glory without a private central bank.
 
For those laughing particularly in other Western countries, shouldn't laugh, a lot or if not all western European banks are privately owned and make you hard workers slaves to pay of your debt.
 
 

astringent
January 8, 2013 at 07:02

This article has a certain quality to it in that it does not have the raw bs that is overwhelmingly found in most articles published by TheDiplomat. Having said that, I think that there's still too much conjecture here. In ten years' time the U.S. could well find itself living in the pauper's house due to the highly reckless trainwreck-heading nature of  U.S. politicians who often behave like the emperor Nero these days.

Truth Speaker
January 8, 2013 at 04:58

"freedom and equality to accompany their growing prosperity – the universal values that define the American Century.”"
HAHAHAHAHAHAHAHA

Share your thoughts

Your Name
required
Your Email
required, but not published
Your Comment
required

Newsletter
Sign up for our weekly newsletter
The Diplomat Brief