China is expected to surpass the United States as the world’s largest economy five years earlier than previous predictions, a working group said.
China will overtake the United States to become the world’s largest economy in 2028, five years earlier than previously estimated due to the contrasting recoveries of the two countries from the COVID-19 pandemic, said a reflection group.
“For a time, a general theme of the global economy has been the struggle for economic and soft power between the United States and China,” the Center for Economics and Business Research said in an annual report released Saturday.
“The COVID-19 pandemic and the corresponding economic consequences have tipped this rivalry in favor of China.”
The CEBR said China’s “skillful pandemic management”, with its strict early blockade, and long-term growth achievements in the West meant that China’s relative economic performance had improved.
China seemed poised for average economic growth of 5.7 percent a year from 2021 to 25 before slowing to 4.5 percent a year from 2026 to 30.
While the United States is likely to have a strong post-pandemic rebound in 2021, its growth would slow to 1.9% annually between 2022 and 2024 and then to 1.6%.
Japan will remain the third largest economy in the world, in dollars, until the early 2030s, when India will overtake it, causing Germany to fall from fourth to fifth.
The UK, currently the fifth largest economy under the CEBR measure, would move up to sixth from 2024.
However, despite the success of the European Union’s single market exit in 2021, Britain’s gross domestic product (GDP) in dollars was projected to be 23 per cent higher than France’s in 2035, aided by the UK leadership. in the increasingly important digital economy. .
Europe accounted for 19 percent of production in the world’s top ten economies in 2020, but that will fall to 12 percent in 2035, or less if there is a sharp divide between the EU and the UK, the CEBR said .
He also said the impact of the pandemic on the world economy would likely present in higher inflation and not in slower growth.
“We see an economic cycle with rising interest rates in the mid-2020s,” he said, posing a challenge to governments that have asked for massive loans to finance their response to the COVID-19 crisis.
“But the underlying trends that have accelerated at this point toward a greener, technology-based world as we move into the 2030s.”