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PwC: Vietnam is set among star performers

Released at: 08:00, 08/02/2017

PwC: Vietnam is set among star performers

Photo: Viet Tuan

Vietnam could be the 20th largest economy by 2050.

by Linh San

By 2050, six of the seven largest economies in the world could be emerging markets. This is according to the latest report from the PwC economists on the theme of the World in 2050: The long view: how will the global economic order change by 2050?

Vietnam could be the world’s fastest growing large economy in 2050, rising to 20th in the global GDP rankings by that date, the report stated.

“Two years ago, PwC’s report forecasted Vietnam to be the 22nd largest economy in 2050. This year’s updated projections have moved Vietnam up to the 20th rank,” Ms. Dinh Thi Quynh Van, General Director of PwC Vietnam said.  

She added, “With major political shocks like Brexit and the 2016 U.S. presidential election, the global economic landscape might be shaken up some more until 2050. In order for Vietnam to navigate this changing playing field, growth needs to be supported by sustained economic reforms, strengthened institutions and mass education to ensure that the work force contributes productively to long-term economic growth.”

The report projects that the world economy could double in size by 2042, growing at an annual average real rate of around 2.5% between 2016 and 2050. This growth will be driven largely by emerging markets and developing countries, with the E7 economies of Brazil, China, India, Indonesia, Mexico, Russia and Turkey growing at an annual average rate of around 3.5% over the next 34 years, compared to only around 1.6% for the advanced G7 nations of Canada, France, Germany, Italy, Japan, the UK and the US.

Mr. John Hawksworth, PwC Chief Economist and co-author of the report, commented, “We will continue to see the shift in global economic power move away from established advanced economies and head towards emerging economies in Asia and elsewhere. The E7 could comprise almost 50% of world GDP by 2050, while the G7’s share declines to only just over 20 per cent.”

PwC economists project global economic growth to average around 3.5% per annum from now until 2020, slowing down to around 2.7 per cent in the 2020s, 2.5 per cent in the 2030s, and 2.4 per cent in the 2040s. This will occur as many advanced economies (and eventually also some emerging markets like China) experience a marked decline in their working-age populations. At the same time, emerging market growth rates will moderate as these economies mature and the scope for rapid catch-up growth declines.

To realize their great potential, emerging economies must undertake sustained and effective investments in education, infrastructure and technology, the report stated. The fall in oil prices from mid-2014 to early 2016 highlighted the importance of more diversified emerging economies for long-term sustainable growth. Underlying all of this is the need to develop the political, economic, legal and social institutions within emerging economies to generate incentives for innovation and entrepreneurship, creating secure and stable economies in which to do business.

Ms. Van adds, “For an export-driven economy like Vietnam, falling global trade growth is intensifying the need to create a more diversified economy which can produce opportunities in a wide variety of industries. Vietnamese policymakers’ determination to build a ‘constructive government’ is a good effort towards that goal, for it would help speed up institutional reforms that are favorable to businesses.”

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