Goldman Sachs has laid out predictions for the global economy over the next half-century, highlighting four key factors that will impact conditions, the investment bank’s economists wrote in a research paper presented in December.
First, people are having fewer children, slowing population growth and putting pressure on economic output. Goldman projects a 3% decline in economic growth per year over the next 10 years. “Global population growth has halved over the past 50 years, from 2% per year to less than 1%, and is expected to fall to close to zero by 2075,” Goldman Chief Economist Jan Hatzius told Yahoo! Finance.
Second, today’s emerging markets (EM) may grow into tomorrow’s economic dynamos. The world’s five largest economies in 2050 will be China, the U.S., India, Indonesia, and Germany, with Indonesia displacing Brazil and Russia among the largest EMs, the report said. Nigeria, Pakistan, and Egypt could be included among the largest economies by 2075.
"Although real GDP growth has slowed in both developed and emerging economies, in relative terms EM growth continues to outstrip DM growth," Hatzius said.
Third, U.S. economic performance will subside over the next ten years, Hatzius said, citing stronger-than-expected output in the past decade.
Finally, wealth distribution remains a factor. "Twenty years of EM convergence has resulted in a more equal distribution of global incomes," Hatzius said. "However, while income inequality between countries has fallen, income inequality within countries has risen. This poses a major challenge to the future of globalization."