China is expected to overtake the United States as the world’s largest economy five years ahead of previous forecasts, a think tank said.
China will overtake the United States to become the world’s largest economy in 2028, five years earlier than expected due to the two countries’ contrasting recoveries from the COVID-19 pandemic, a think tank said.
“For a time, a central theme of the global economy has been the struggle for economic power and soft power between the United States and China,” the Center for Economics and Business Research said in an annual report. Saturday.
“The COVID-19 pandemic and the associated economic fallout have certainly tilted this rivalry in favor of China.”
The CEBR said that China’s “skillful handling of the pandemic,” with its strict early lockdown and the repercussions of long-term growth in the West meant that China’s relative economic performance had improved.
China appeared poised for average economic growth of 5.7% per year from 2021 to 25 before slowing to 4.5% per year from 2026 to 30.
While the United States was likely to experience a strong post-pandemic rebound in 2021, its growth would slow to 1.9% per year between 2022 and 2024, and then to 1.6% thereafter.
Japan would remain the world’s third-largest economy, in dollar terms, until the early 2030s, when it would be overtaken by India, pushing Germany from fourth to fifth.
The UK, currently the fifth-largest economy according to the CEBR measure, would drop to sixth place from 2024.
However, despite a severe blow in 2021 following its exit from the European Union’s single market, Britain’s gross domestic product (GDP) in dollars is expected to be 23% higher than that of France by 2035, helped by the UK lead in the increasingly important digital economy. .
Europe accounted for 19% of output in the world’s top 10 economies in 2020, but that figure will drop to 12% by 2035, or less if there is an acrimonious split between the EU and the UK, said the CEBR.
He also said the impact of the pandemic on the global economy would likely translate into higher inflation, not slower growth.
“We are seeing a business cycle with rising interest rates in the mid-2020s,” he said, posing a challenge to governments that have borrowed heavily to finance their response to the COVID-19 crisis.
“But the underlying trends that have been accelerated at this point towards a greener, more tech-driven world as we move into the 2030s.”