“The only function of economic forecasting is to make astrology look respectable,” said John Kenneth Galbraith, the wisest American economist of his generation. (“A paltry honour,” he would have murmured.) But you still can’t resist wondering when the Chinese economy will be bigger than the US economy – or the Brazilian bigger than the British, or the Turkish bigger than the Italian – as if it were some kind of horse race.
The latest document to tackle these questions is “The World in 2050″, drawn up by HSBC bank, which ranks the world’s hundred biggest economies as they are now, and as (it thinks) they will be in 2050. It contains the usual little surprises, like a prediction that per capita incomes in the Philippines and Indonesia, now roughly the same, will diverge so fast that the average Filipino will have twice the income of the average Indonesian by 2050.
The Venezuelan economy will only triple in size, but Peru’s economy will grow eightfold. Per capita income will double-and-a-bit in Nigeria; in Ethiopia it will grow sixfold. Bangladesh powers past Pakistan, with a per capita income in 2050 that’s half again as big as Pakistan’s. (It’s only two-thirds of Pakistan’s at the moment.) And so on and so forth: local phenomena mostly of interest to local people.
But what’s happening at the top of the list is of interest to everybody. That’s where the great powers all live, with the BRICs nipping at their heels. Or rather, some of the BRICs are nipping at their heels, and some are not. That’s the big news.
We owe the concept of the BRICs to Jim O’Neill, who came up with it almost fifteen years ago when he was head of economics at Goldman Sachs. He was the first to realise that some big, poor countries were growing so fast economically that they would overtake the established great powers in a matter of decades.
The really impressive performers were Brazil, Russia, India and China, so he just called them the BRICs – and pointed out that at current growth rates the Chinese economy would be bigger than that of the United States by the 2040s. We’re quite familiar with that kind of prediction today, but at the time it was shocking (especially to Americans), and the term BRIC has become firmly entrenched in the language. Just in time for HSBC to spoil it.
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