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China will overtake the United States and become the world’s largest economy in 2028, five years earlier than previously estimated. Acceleration due to Covid. Or rather: the cause of overtaking is the different and divergent recovery trajectory after the pandemic. This is the response of the analysis carried out by the Center for Economic and Business Research (Cebr) in the annual report published on December 26, 2021.
Policies to combat Covid and policies for growth
The Covid-19 pandemic, the related economic consequences and the difference in policies to combat the virus, the report says, have definitely nullified the rivalry between Washington and Beijing in favor of China. Cebr emphasizes China’s skillful handling of the pandemic with its own strict early blocking to prevent the spread of infection. That would be the key that will allow Pechina long-term growth that the West can no longer afford.
The (divergent) growth dynamics between China and the US
According to studies by Cebr analysts, China’s GDP seems destined for an average growth of 5.7% per year from 2021 to 2025, before slowing to a comforting + 4.5% per year from 2026 to 2025. 2030. On the other hand , the United States is expected to ensure a strong post-pandemic rebound in 2021, but its average economic growth would slow to 1.9% annually between 2022 and 2024. A value that should subsequently decline to 1.6% in subsequent years.
Japan on the podium, race of India
But what will happen behind the superpowers in the next few years? According to the report, Japan would remain the world’s third largest economy, until the early 1930s of the 21st century, when it was overtaken by India. As a result, Germany will move from fourth to fifth place in the top ten.
UK and EU: who will win the Brexit challenge?
Britain, currently the fifth largest economy according to Cebr, would slide to sixth place in 2024. The real question for Europeans, however: who will win the Brexit challenge? In other words, will the London economy or the European economy grow more after the British dismissal from the European Union? According to the report, despite the exit from the European single market in early 2021, British GDP calculated in dollars should be 23% higher than that of France in 2035 (the secret, according to analysts, represented by the impetuous British growth in economy digital and value-added services).
The decline of Europe
Europe, which in 2020 still accounts for 19% of world production in the top ten economies, will sadly fall to 12% in 2035. A path that would have been even steeper in the event of a sharp gap between the EU and Great Britain (Hard Brexit).
And after Covid? More inflation, but sustained growth
The study also indicates that the global impact of the pandemic on the planet’s economy will likely come with higher inflation, but not slower growth. We foresee, it is read, an economic cycle with rising interest rates in the mid-1920s. A circumstance that would pose a threat to governments that have massively borrowed, expanding public debt to excess, to finance the response to Covid and the economic crisis. However, not everything would be useless. Rising rates will be partially offset by stronger inflation, while public and private investment will lead to a greener and more environmentally friendly world, with a decisive technological leap to benefit from.
