The Centre for Economics and Business Research (CEBR) said it’s annual report, published last week, that China will overtake the United States and become the world’s largest economy in 2028.
This is five years earlier than the CEBR had previously estimated is a direct reaction to how both China and the United States have managed the Covid-19 pandemic and each country’s related business and economic recovery.
The CEBR said that: “For some time, an overarching theme of global economics has been the economic and soft power struggle between the United States and China. The COVID-19 pandemic and corresponding economic fallout have certainly tipped this rivalry in China’s favor.”
The CEBR analyzed China’s “skillful management of the pandemic”, with its strict early lockdown, and compared this to the management of the Covid-19 pandemic in the west.
China’s superior management means that the country is set for average economic growth of 5.7% a year from 2021- 2025 and will average 4.5% a year from 2026 - 2030.
A strong post-pandemic rebound is expected in the United States in 2021 that is expected to be above 3.0%, but growth is projected slow to 1.9% a year between 2022 and 2024, and then to 1.6% or less from 2025.
The report also says in its report that Japan will remain the third-largest economy until the early 2030’s and after that it will be overtaken by India. After India overtakes Japan, Germany will be the fifth largest economy, followed by the United Kingdom in sixth place.
The CEBR’s report also says that Europe accounted for 19% of output in the top 10 global economies in 2020 but that will fall to 12% by 2035, or lower, depending upon the British exit from the European Union.
As a final note, the report also says that the Covid-19 pandemic’s impact on the global economy is expected show up in higher inflation rates rather than slower economic growth.
According to the CEBR, “We see an economic cycle with rising interest rates in the mid-2020’s, ”posing a challenge for governments, many of which have borrowed massively to fund their response to the COVID-19 crisis. But the underlying trends that have been accelerated by this change in economic growth point to a greener and more tech-based world as we move into the 2030’s.”