Future Global Economy Trends Point to Opportunities for Companies with Right Approach

The long-term global economic power shift away from the established advanced economies is set to continue over the period to 2050, as emerging market countries continue to boost their share of world GDP in the long run despite recent mixed performance in some of these economies.

This is one of the key findings from a report from PwC economists on the theme of ‘the World in 2050: The Long View: how will the global economy order change by 2050?’ This presents projections of potential GDP growth up to 2050 for 32 of the largest economies in the world, which together account for around 85% of global GDP. These projections are based on the latest update of a detailed long-term global growth model first developed by PwC in 2006.

The report projects that the world economy could double in size by 2042, growing at an annual average real rate of around 2.5% between 2016 and 2050. This growth will be driven largely by emerging market and developing countries, with the E7 economies of Brazil, China, India, Indonesia, Mexico, Russia and Turkey growing at an annual average rate of around 3.5% over the next 34 years, compared to only around 1.6% for the advanced G7 nations of Canada, France, Germany, Italy, Japan, the UK and the US.

John Hawksworth, PwC Chief Economist and co-author of the report, comments:

“We will continue to see the shift in global economic power away from established advanced economies towards emerging economies in Asia and elsewhere. The E7 could comprise almost 50% of world GDP by 2050, while the G7’s share declines to only just over 20%”

Deepankar Sanwalka, Leader- Advisory, PwC India comments: “This shift in global economic power to emerging economic economies is one of the most relevant and pronounced megatrends for India. The confidence of Indian CEOs about their company’s prospects and the kind of new business opportunities we see in India today is a testimonial of that trend. The growth we are aspiring for and gearing up to witness will have to be sustainable, inclusive and technology enabled.”

The report predicts great opportunities for businesses with the right strategic mix of flexibility and patience to succeed in these emerging markets. Case studies in the PwC report illustrate how businesses should be prepared to adjust their brand and market positions to suit differing and often more nuanced local preferences. An in-depth understanding of the local market and consumers will be crucial, which will often involve working with local partners.

“Businesses need to be patient enough to ride out the short-term economic and political storms that will inevitably occur from time to time in these emerging markets as they move towards maturity. But the numbers in our report make clear that failure to engage with these emerging markets means missing out on the bulk of the economic growth we expect to see in the world economy between now and 2050,” John Hawksworth concludes.

More details on business strategies for emerging markets can be found in reports by the PwC Growth Markets Centre, which are available on www.pwc.com