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Global Economic Trends in the Coming Decades Kamhon Kan Academia Sinica 簡錦漢 中研院經濟所 2017.09.22 2/18
Global Economic Trends in the Coming Decades New top ten & new economic powers Emerging Asia Mediocre spending power for individuals in newly-rich countries Demographic decline Proliferation of RTA 3/18
Newtopten&neweconomicpowers ten & new economic powers US China India Japan Germany Russian Federation United Kingdom Brazil France Mexico Indonesia 2050 [2] 2015 [1] 2050 [1] 2015 [2] 2050 [3] 2015 [3] 2050 [4] 2015 [4] 2050 [10] 2015 [5] 2050 [9] 2015 [6] 2050 [8] 2015 [7] 2050 [6] 2015 [8] 2050 [11] 2015 [9] 2050 [7] 2015 [10] 2050 [5] 2015 [15] 4777.53 6100.03 4112.86 4299.87 2957.69 4357.48 2362.15 5043.4 2235.78 5182.06 2196.85 4001.83 2083.44 5167.31 1705.74 6076.13 1247.28 15707 13308.6 27817.8 32341.6 45730.4 2015 Nominal GDP 2050 Nominal GDP Nominal GDP (US unit : one billion dollars ) Source: OECD statics China overtakes the U.S. in 2026 India moves to the third place -with real annual at 5% Indonesia [5th] & Mexico [7th] - was 15th and 10th France moves out of top 10-11th in 2050 4/18
New top ten & new economic powers Emerging Asian markets Share of global GDP (%) 0 20 40 60 80 100 M East & S Africa Europe America Asia M East & S Africa Europe America Asia M East & S Africa Europe America Asia M East & S Africa Europe America 2010~2019 2020~2029 2030~2039 2040~2050 Share of global GDP almost 50% (2015) Growth in share will continue - to almost 60% in 2050 Asia Source:OECD Statics 5/18
New top ten & new economic powers Purchasing Power 2015 2050 Luxembourg Norway United States Switzerland Canada Australia Austria Ireland Germany Sweden Netherlands Iceland United Kingdom Korea Belgium Denmark Japan Israel Finland France New Zealand Spain Italy Czech Republic Slovenia Slovak Republic Portugal Greece Estonia Poland Russian Federation Hungary Chile Turkey World Mexico Brazil South Africa China Indonesia India 40886.3 38652.7 38110.9 37602.4 37272.5 36865.7 36846.3 36596.5 35246.3 34741.7 33915.8 33511.3 33234.2 32770.8 31981.1 31204.1 30335.2 27751.6 26343.3 25919 24062.9 23981.7 22070.5 20956.8 19999.4 19963.7 19883.7 18001.5 17821.5 17374.8 14717.2 14512 13668 10682 10188.3 9507.59 4900.93 3705.23 47448.5 57481.4 69428.6 Luxembourg Norway United States Netherlands Australia Korea Switzerland Austria Sweden United Kingdom Denmark Canada Germany Belgium Finland Iceland Japan Israel Ireland Czech Republic France Estonia New Zealand Slovenia Chile Italy Slovak Republic Portugal Greece Spain Russian Federation Turkey Hungary Poland World Mexico China South Africa Brazil Indonesia India 22452.6 18907 17172.9 80755.2 74774.3 73712.8 71291.5 69995.4 68162.8 67046.1 66007.9 61752.9 60792.8 60726.6 59233.1 59173.1 57357.1 56668.7 56593.9 56536.4 56096.8 54681.7 50644.8 50340.6 49301.4 47173.7 45863.9 44439.3 44147.8 43760.5 43059.4 40852.5 38650.4 37666.9 36967.7 34592.7 33123.5 33020.8 31754.8 92447.6 106476 0 20,000 40,000 60,000 80,000 Nominal GDP per capita(unit:us dollars) Source: OECD Statics 0 20,000 40,000 60,000 80,000 100000 Nominal GDP per capita(unit:us dollars) Source: OECD Statics Emerging countries spending power catch up fast. But still low in 2050 (China/India still at the bottom). 6/18
New top ten & new economic powers Purchasing Power Luxembourg Norway United States Switzerland Canada Australia Austria Ireland Germany Sweden Netherlands United Kingdom Korea 2050 [1] 2015 [1] 2050 [2] 2015 [2] 2050 [3] 2015 [3] 2050 [7] 2015 [4] 2050 [12] 2015 [5] 2050 [5] 2015 [6] 2050 [8] 2015 [7] 2050 [19] 2015 [8] 2050 [13] 2015 [9] 2050 [9] 2015 [10] 2050 [4] 2015 [11] 2050 [10] 2015 [13] 2050 [6] 2015 [14] 36865.7 36846.3 36596.5 34741.7 33915.8 38652.7 38110.9 37602.4 37272.5 40886.3 47448.5 57481.4 56536.4 60792.8 60726.6 66007.9 68162.8 67046.1 66007.9 69428.6 Nominal GDP per capita (US unit:dollars) 69995.4 73712.8 71291.5 74774.3 92447.6 106476 2015 Nominal GDP per capita 2050 Nominal GDP per capita Source: OECD Statics Today s advanced economies are likely to continue to dominate in spending power. 7/18
Working-age population: 1.7% (1980-2014) 0.3% (2015-50) 8/18 Demographic decline Average growth in global population (%) 2 1.8 1.6 1.4 1.2 1.8.6.4.2 0 Population Working age population 1991~2000 2001~2010 2011~2018 2019~2030 2031~2040 2041~2050 Source:The Economist Intelligence Unit Recent economic growth has been driven by population growth. Dramatic decline: 1.3% (1980-2014) 0.5% (2015-50).
Real GDP (%change compound annual) 4.5 4 3.5 3 2.5 2 1.5 1.5 0 Demographic decline 2011~2019 2020~2030 2031~2040 2041~2050 period Middle east & Africa Asia Pacific Americas Europe World Source: The Economist Intelligence Unit Regional growth rates are expected to begin to decline. Global economic growth remains steady. 9/18
Increase in labour force (m) 180 160 140 120 100 80 60 40 20 0 Demographic decline Some still grow Nigeria Pakistan Philippines Egypt Iran Kenya Angola Algeria Kuwait 2050 2014 Libya Source:The Economist Intelligence Unit Labor force in Angola, Nigeria and Kenya expected to almost triple The labour forces of Algeria, Egypt and Iran double Benefit from increased participation women. 10 / 18
Demographic decline Some still grow Contribution to real GDP growth [ 2019~2050(%compound annual growth)] 5 4 3 2 1 0 Angola Angola Kenya Kenya Nigeria Nigeria Philippines Pakistan Pakistan Philippines Venezuela Venezuela of which Capital and TFP of which Labour Real GDP (%change) Iran South Africa Algeria Egypt Algeria Egypt Iran South Africa Source: The Economist Intelligence Unit Favorable demographics higher levels of growth 11 / 18
Demographic decline A drag to growth Decrease in labour force (m) 70 60 50 40 30 20 10 2050 2014 0 Japan Germany Thailand South Korea Ukraine Taiwan Japan - 66m 47m China & South Korea - 17-18% drop Taiwan - over 30% drop Romania Portugal Greece Lithuania Source:The Economist Intelligence Unit Europe, Greece, Portugal and Germany decline by over 20% 12 / 18
Demographic decline A drag to growthh Contribution to real GDP growth [ 2019~2050(%compound annual groth)] 3 2 1 0 1 Japan Japan Thailand Thailand Romania Romania Germany Germany of which Labour Real GDP (%change) of which Capital and TFP South Korea Ukraine Taiwan Russia Portugal Greece Ukraine Taiwan Russia Greece Portugal South Korea Source: The Economist Intelligence Unit 13 / 18
Demographic decline Some implications Run out of workers and customers. Economic growth suffers. Demands: Services (health care), Durables(cars,housing). Unemployment less a problem: More people leave the labor market, less enter. Excess savings: Less young (low savings rate), More middle aged (save for retirement) hold down interest rate. Bad fiscal health pension. Economies less sensitive to monetary policies lower interest rate will not lure older people to spend. What to do & what to expect: Immigrants (political issues, international competition for talents), Older/female workers (past retirement age), Robots/automation of all kinds. 14 / 18
Proliferation of Regional Trade Agreements Important implications for global value/supply chains & geopolitics. 15 / 18
Proliferation of Regional Trade Agreements Implications Rules of orgin: Shift from lower-cost suppliers outside an FTA to higher-cost suppliers from within An arena of geopolitical competition: Trade policies as security policies (e.g., TPP vs. RCEP). Need to manoeuvre betwen competing giants. Different Frameworks may or may not be compatible not clear yet. 16 / 18
Thank you! 17 / 18