Emerging economies are expected to take longer to outpace the growth of developed economies, as per a forecast by Centre for Economics and Business Research.
According to a report from the Centre for Economics and Business Research, the economic growth of emerging nations including India, Brazil and China have suffered a setback and they will take longer to outpace developed economies.
The Cebr consultancy’s 2019 World Economic League Table was more downbeat on the global economy than last year’s outlook.
“For the medium term, we are roughly as optimistic as we were a year ago, but suspect the route to growth will be more bumpy than we had assumed 12 months ago,” reads an extract from the report, which forecast the fortunes of 193 countries to 2033.
It goes on to read, China is expected to overtake the U.S as the world’s top economy in 2032 – two years later than was previously estimated. It also expects Brazil to overtake Italy in 2020, rather than 2018.
India is expected to overtake Britain and France, in 2020 rather than 2019, in line with its prediction a year ago.
Britain is also slated to lose its place as the world’s sixth largest economy with France taking its place. Its displacement is due to Brexit-related disruptions; it could regain its spot by 2023.
The Cebr has also projected Ireland to be among the fastest growing economies in the euro zone in 2019, although Brexit related concerns pose as a big downside risk to the forecast.
The impact of the U.S.-China trade war have had global repurcussions and has dented global growth.
Markets across the world have seen a setback with investors cutting their positions on risky assets scared of tightening monetary policy from the world’s central banks whose loose monetary policy has so far supported the growth of the global economy. Trade wars have however weighed on this growth.
“With debt high and many of the structural problems that caused the great recession still in existence, a global recession could be more difficult to resolve than its predecessors,” reads Cebr’s report.
However, according to Douglas McWilliams, the deputy chairman of the Cebr, policymakers and governments still have sufficient ammunition to see the world through the next recession, although he sees a shift from monetary to fiscal action.
“We’re in a world now where there’s a sense that a certain degree of fiscal action will have to be applied in order to avoid the world falling flat on its face,” said McWilliams.
He foresees a rise in government spending – both in fiscal and discretionary spending. He also sees governments delivering more support than central banks.
With many economies facing an infrastructure backlog and mega-projects such as China’s Belt and Road ongoing, the Cebr forecasts global construction spending will rise from $11.5 billion to $27.4 billion or 15.5% of world GDP by 2033.