Six nations including India to dominate growth by 2025: World Bank
Posted: Wed May 18 2011, 00:58 hrsNew Delhi:
Six major emerging economies including India are set to cause a shift in economic power concentrated in US, UK and Japan, transforming the world into a multi-polar global economy by 2025, a new World Bank report said on Tuesday.
The six countries — Brazil, China, India, Indonesia, South Korea, and Russia — will account for almost half of the world's economic growth by the next 15 years, the bank said in its latest report ‘Global Development Horizons 2011: Multipolarity: The New Global Economy’.
This will not only ensure that the centres of economic growth are spread across the world but also that no one currency will dominate the global economy and the Chinese renminbi will assume a greater role.
“China and India are likely to be the main flag bearers among emerging market growth poles in the years ahead,” the report said.
In the Bank's view, as economic power shifts, these successful economies will help drive growth in lower income countries through cross-border commercial and financial transactions. These six economies are estimated to grow on average by 4.7 per cent annually between 2011 and 2025, according to the report. However, advanced economies which are expected to grow by 2.3 per cent over the same period will remain prominent in the global economy with the euro area, Japan, the UK, and the US all playing a core role in fuelling global growth.
But in order to sustain their growth momentum and serve as true growth poles, emerging economies will need to undertake structural changes that will generate self-sustaining growth through productivity advances and robust domestic demand.
This will also require high saving rates consistent with investment opportunities, efficient allocation of capital and the ability to not just adopt new technologies but also drive innovation, the report said.
“The fast rise of emerging economies has driven a shift whereby the centres of economic growth are distributed across developed and developing economies, it's a truly multi-polar world,” World Bank chief economist and senior vice president of development economics Justin Yifu Lin said.
He said that emerging market multinationals are becoming a force in reshaping global industry, with rapidly expanding investment and FDI inflows and that international financial institutions need to adapt fast to keep up.
The report also states that with the emergence of a substantial middle class in developing countries and demographic transitions underway in several major East Asian economies, stronger consumption trends are likely to prevail, which in turn can serve as a source of sustained global growth. The Bank also said that in its view the most likely global currency scenario in 2025 will be a multi-currency one centered around the dollar, the euro, and the renminbi.
According to the report, China, Indonesia, India, and Russia all face institutional and governance challenges. Human capital and ensuring access to education is a concern in some potential growth poles, particularly Brazil, India, and Indonesia, it added.
(source:indianexpress.com)
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