HONG KONG (Business Insider US). – The United States could lose its position as the world’s biggest economy as soon as next year, and once that happens, the US will likely never regain the top spot as developing Asian economies power ahead.
Research released this week by “Standard Chartered Bank” say China is most likely to become the world’s biggest economy in 2020, measured by a combination of purchasing power parity (PPP) exchange rates and nominal GDP.
Using PPP alone, China is already considered the world’s largest economy, but on a nominal basis, the United States remains in the lead for the time being.
It is likely for China to overtake the US in 2020, and by 2030 there is a large possibility that they will be joined by India with an annual GDP growth set to accelerate from around 6% now to almost 8% in the coming decade.
“India is likely to become the main mover, with its trend growth accelerating to 7.8% by the 2020s partly due to ongoing reforms, including the introduction of a national goods and services tax (GST) and the Indian Bankruptcy Code (IBC),” Standard Chartered said.
India’s rise will also reflect a growing trend of Asia becoming the dominant region of the planet, economically speaking, as the size of its output starts to match the size of its population.
“Our long-term growth forecasts are underpinned by one key principle: countries’ share of world GDP should eventually converge with their share of the world’s population, driven by the convergence of per-capita GDP between advanced and emerging economies,” a team of economists from the bank wrote in a note to clients.
By 2030, the bank said, Asian GDP will account for roughly 35% of global GDP, up from 28% last year, and just 20% in 2010. This will be equivalent to the output of both the eurozone and the US combined.
By 2030, seven of the 10 largest economies will be in Asia, as the chart below illustrates:
Worlds biggest economies by 2030. Graphic by: Will Martin/Business Insider US
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