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Indian Economy

OECD’S Forecast for Global Economy in 2060

  • 25 Aug 2018
  • 4 min read

Organization for Economic Co-operation and Development (OECD) recently released a research analysis- The Long View: Scenarios for the World Economy to 2060.

  • World real GDP growth will decline from 3.5% in 2018 to 2% in 2060.
  • By 2060, India, China, and Indonesia combined will represent almost half of the world’s economic output.

Findings of Research

  • World growth slows and weight of emerging economies rises
    • By 2060, the global real GDP growth rate will decrease. The share of Emerging market in Global GDP will increase.
    • China’s share of world output will be at its peak during the 2030s at about 27% and will decline thereafter, while India’s share in Global GDP will keep increasing.
    • By the mid-2030s, India’s contribution to global GDP will be the largest and will surpass that of China.
    • Causes for the decline in global GDP: Decline in working age population due to population ageing will decrease employment rate as older people are less likely to be employed than middle-aged people.
    • Prospects for Emerging Market Economies 
      • The world’s economic center of gravity continues to shift towards Asia
        • The center of gravity of world economic activity will move from North America and Europe towards Asia.
        • Therefore, countries that are geographically closer to large markets like India and China will become less economically remote and will benefit from easier access to their markets.
      • Living standards continue to improve
        • Living standards in all countries will continue to improve with rising GDP and will gradually move towards that of developed countries.
        • But living standard in BRICS and low-income countries will remain below and almost half to that of the USA in 2060.
      • Institutional reforms would speed the convergence of emerging market economies
        • The BRICS countries have scope for improvement in the quality of governance and level of educational attainment.
        • If BRICS improve quality of institutions and raise educational attainment, then living standard in BRICS will be 30% to 50% higher in 2060 than now.
        • Institutions are important because they can create positive incentives for business investment, technology adoption, and human capital accumulation.
        • Institutions may encourage people to work towards the growth-enhancing environment, or they may lead to corruption and personal gain at the expense of the rest of society.
        • Education will enhance the knowledge and skills in individuals and also will encourage:
          1. participation in groups.
          2. opens doors to job opportunities.
          3. makes individuals better aware of their rights.
          4. improves health.
          5. reduces poverty.
  • Organisation for Economic Cooperation and Development
    • The OECD is an intergovernmental economic organisation, founded to stimulate economic progress and world trade.
      Most OECD members are high-income economies with a very high Human Development Index (HDI) and are regarded as developed countries.
    • Founded: 1961.
    • Headquarters: Paris, France.
    • Total Members: 36.
    • India is not a member, but a key economic partner.
    • Reports and Indices by OECD
      • Government at a Glance 2017 report.
      • International Migration Outlook.
      • OECD Better Life Index.
  • Emerging Market Economy: An emerging market economy is a nation's economy that is progressing toward becoming an advanced economy.
  • BRICS is an international grouping consisting of Brazil, Russia, India, China and South Africa.
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