Global Growth Generators

Where will global economic growth come from in the next 40 years?

Right now the world economy is about $75 billion. By 2030 it’s expected to more than double to $180 billion, and by 2050 it could double again to $380 billion. That’s a 4.1% annual growth rate. At the same time, population is only supposed to grow .6% annually to about 9 billion people.

This means that global wealth is increasing like never before. The policies that generate wealth in developing nations are no secret: an expansion of global trade, provision of basic infrastructure to previously marginal populations—like roads, education, and basic healthcare—and technological innovations like cell phones and messaging. It also helps to start with a large, young population. Where will the growth come from?

Not surprisingly, emerging Asia is a key location. China is forecast to have a larger economy than the US in 15 years or so, but India should overtake China in another 15 years. Bangladesh, the Philippines, and Indonesia, Sri Lanka, and Vietnam round out the Asian growth engines. Nigeria and Egypt are also numbered among the fast-growers.

But growth is never smooth. Even as these large populations emerge from poverty and their increasing economic contributions lift us all, potential for conflict, corruption, and political backlash increase. These countries don’t have the institutional stabilizers of the developed world. Nevertheless, the world’s economic future has never been brighter.

Douglas R. Tengdin, CFA
Chief Investment Officer
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