TAIPEI (Taiwan News) — A British think tank recently released a report that dramatically adjusted its economic growth forecast due to the pandemic, and it now projects that China will overtake the United States as the world’s largest economy in 2028, five years ahead of its estimate last year.
The Centre for Economics and Business Research (CEBR) released its annual World Economic League Table on Dec. 26. The report reviews the economic outlook for 193 countries and takes note of a number of global trends.
The CEBR estimates the pandemic has already cost the world US$6 trillion in GDP losses. A full return to pre-pandemic world nominal GDP levels is unlikely to occur until well into the 2030s, based on the group’s charts.
The different responses to the pandemic by governments around the world will also have long-lasting economic consequences, according to the report, and the disaster is likely to “redistribute economic momentum between countries with Asia doing best and Europe worst.”
China in particular stands to benefit, having “sustained less economic damage than any other major economy” as a result of its pandemic response, wrote the CEBR. The East Asian country is poised to grow at 2 percent in 2020, while other major economies will contract this year.
Though China's self-reported economic data has long been plagued by inaccuracy, the report nevertheless predicts China's economy will surpass the U.S.' in dollar terms in 2028, starting with 5.7 percent annual growth next year and dropping to 4.5 percent from 2026 through the end of the decade. In per capita terms, however, China will remain significantly poorer than the U.S. for many years to come, as the country has four times the population of the North American superpower.
As for the U.S., the CEBR expects 1.9 percent annual growth from 2022 to 2024, followed by 1.6 percent "for the rest of the forecast horizon.”
In 2021, growth is forecast to pick up sharply around the world, if only as an inevitable rebound from the severe downturn in 2020. Rather than seeing sluggish growth as the foremost dilemma for the next few years, the CEBR expects inflation to become more salient.
This is largely due to massive government borrowing to finance stimulus measures and other responses to the pandemic. The report credits the U.S. with helping to stabilize the global economy through its own debt-spending, which the CEBR says gave "central banks the confidence that they could monetise the Covid-19 debt without fear of a negative reaction in the forex markets.”