Citi-Knight Frank Wealth Report: Economic power will be in Asia
August 23, 2012
Asia is set to become the “economic center of gravity” by the year 2050, with four out of 10 largest economies and 7 out of 10 fastest growing economies all coming from that region.
That is according to the “2012 Wealth Report” published by Citi Private Bank and real estate consultancy firm Knight Frank.
The study was commissioned to determine the location, attitudes, and lifestyle of wealthy citizens, otherwise known as high networth individuals (HNWI), or people with at least $25 million of investable assets.
Economic Center of Gravity
According to the report, economic power is on the move and is expected to settle in Asia by 2050. The “economic center of gravity” model by London School of Economics professor Danny Quah shows that the focal location of economic activity by GDP in 2050 will be somewhere between China and India. In 1980, the economic center of gravity was in the middle of the Atlantic Ocean. In 2012, it is somewhere in the Middle East.
As the economic powerhouse, Asia will be home to countries estimated to have the world’s largest economies in 2050 and countries that will grow the fastest in the next 40 years.
World’s Largest Economies – 2050
In 2010, the world’s largest economies are the United States, China, Japan, India, and Germany. This is similar to the 2010 data of the Top 10 World Economies released by the IMF and CIA World Factbook.
However, by 2050, India is set to overtake not just the United States but also China, booking a Gross Domestic Product (GDP) of more than $86 trillion.
China will be the World’s No. 2 economy in 2050 with GDP of $80 trillion, while current world leader United States is only third with barely half of China’s GDP at $39 trillion.
Here is a 2010 and 2050 comparative list of the largest world economies.
Fastest Growing Economies – 2010 to 2050
Out of the 10 countries estimated to grow the fastest in the next 40 years, seven of them will come from Asia.
The Philippines is ranked 6th, expected to grow its GDP by 7.3% on average per year. The other countries from Asia are India (8.0% GDP growth); Bangladesh (7.5%); Vietnam (7.5%); Mongolia (6.9%); Indonesia (6.8%); and Sri Lanka (6.6%).
“All of these countries are poor today and have decades of catch-up growth to look forward to,” according to the report.
In terms of economies, however, that will grow the slowest, all but one country will come from Europe. Japan, despite being considered the 9th largest economy in 2050, will grow flat at 1.0% per year on average. The other nine slow-growing economies are from Europe: Germany, Italy, Netherlands, Austria, Switzerland, Belgium, Sweden, France, and Spain.
Highest GDP per Capita – 2050
In terms of purchasing power parity, Singapore will remain to be the home of the world’s wealthiest people, with its GDP per capita estimated to double to $137,710 forty years from now.
Other Asian economies such as Hong Kong, Taiwan, and South Korea will also have the world’s citizens with highest GDP per capita income, ranked 2nd, 3rd, and 4th, respectively, in the Highest GDP per Capita list. The United States will also more than double its purchasing power parity to $100,802 but it will slide in ranking from 3rd in 2010 to 5th in 2050.
Here is a summary of the Top 10 Economies with the Highest GDP per Capita in 2010 and 2050.
Source: Citi Private Bank and Knight Frank
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