The PricewaterhouseCoopers is predicting that Nigeria will be among the top 10 economies in the world by 2050 if it builds strong institutions, diversify economy and sustains growth friendly policies
| By Anayo Ezugwu | Mar. 23, 2015 @ 01:00 GMT |
DESPITE economic challenges confronting Nigeria, the PricewaterhouseCoopers, PwC, has predicted that the country’s economy will be among the top 10 economies in the world by 2050. This is one of the key findings in PwC latest report entitled: “The World in 2050: Will the Shift in Global Economic Power Continue?” published on its website by its economists. The PwC economists presented long-term projections of potential Gross Domestic Products, GDP, growth up to 2050 for 32 of the largest economies in the world, covering 84 percent of total global GDP.
The latest report stated that if Nigeria, Indonesia and Mexico are able to build institutions to global standards, diversify their economies and sustains growth friendly policies, their economies could push those of United Kingdom and France out of the top 10 by 2050. According to the report, the current global economic power shift away from the established advanced economies in North America, Western Europe and Japan will continue over the next 35 years despite a projected slowdown in Chinese growth after 2020.
The world economy is projected to grow at an average of just three (3) percent per annum from 2014 to 50 doubling in size by 2037 and nearly tripling by 2050. But there’s likely to be a slowdown in global growth after 2020, as the rate of expansion in China and some other major emerging economies moderate to a more sustainable long-term rate, and as working age population growth slows in many large economies. Nigeria, Vietnam and the Philippines are notable risers in the global GDP rankings in the long-term, reflecting relatively high projected average growth rates of around 4.5-5.5 percent per annum over the period to 2050.
Andrew S. Nevin, PwC Nigeria’s chief economist and co-author of the report, said over the past decade, Nigeria had boasted superior economic growth and, with the right reforms and investments, the country could become one of the world’s leading economies by 2030, with further progress by 2050. He said Nigeria’s potential advantages for future growth include a large consumer market, a strategic geographic location, and a young and highly entrepreneurial population.
“However, at the same time, we are all aware of the significant headwinds created by the rapid drop in the oil price, putting pressure on the fiscal and monetary systems, as well as reducing economic growth in the short term. To achieve its long-term economic potential, Nigeria will need to manage the oil price decline effectively at all levels of government and create a sustainable platform for diversification into the sectors that we know will drive the economy in the future – including power, agriculture, manufacturing, telecoms, hospitality and real estate. Beyond Nigeria, we project that China will be the largest economy by 2030 on any measure.
“However, we also expect its growth rate to slow markedly after around 2020 as its population ages, its high investment rate runs into diminishing marginal returns and it needs to rely more on innovation than copying to boost productivity. Eventual reversion to the global average has been common for past high growth economies such as Japan and South Korea and we expect China to follow suit,” he said.
The report also contained projections based on GDP at market exchange rates, without relative price adjustment. On that basis, China is projected to overtake the US around 2028, while India would clearly be the third largest economy in the world in 2050, but still some way behind the US.
The report projected that Malaysia economy would grow at around four (4) percent per annum on average in the period to 2050, which is higher than China’s projected average growth rate of around 3.5 percent per annum over this period, and an impressive performance for what is already a middle income country. It also projected that Colombia economy would grow at a relatively healthy long term rate of around four percent per annum over the period to 2050, noticeably faster than its larger Southern American neighbours like Brazil and Argentina.
Japanese growth is projected to be the slowest of all 32 countries covered in total terms, driven in part by a steadily declining population; as a result Japan is projected to fall from 4th to 7th place in the global GDP rankings over the period to 2050. European economies tend to slide down the rankings, with growth rates in the major Eurozone economies projected to average only around 1.5 to 2 percent per annum to 2050. Poland is projected to have the highest average growth rate of the large EU economies, and also to outperform Russia in terms of long-run growth.