Positive prospects for emerging nations bring challenges and opportunities for Canada



    TORONTO, March 25 /CNW/ - Long-term growth prospects for China, India and
other so-called 'E7' economies (Brazil, Mexico, Russia, Indonesia and Turkey)
remain upbeat. However according to a new report from PricewaterhouseCoopers
(PwC) an additional 13 emerging economies also have the potential to grow
significantly faster than the established OECD countries. This rapid growth
creates both challenges and opportunities for Canada.
    The report, The World in 2050: Beyond the BRICs: a broader look at
emerging market growth prospects, suggests that China could overtake the US by
2025 to become the world's largest economy and will continue to grow to 130%
of the size of the US economy by 2050. The Indian economy could grow to almost
90% of the size of the US economy by 2050. Brazil seems likely to overtake
Japan by 2050 to move into fourth place, while Russia, Mexico and Indonesia
all have the growth potential to surpass the economies of Germany or the UK by
the middle of this century. The most impressive economic growth could be
realized by Vietnam, with a potential growth rate of almost 10% per annum in
real dollar terms. This rapid growth could propel the Vietnamese economy to
around 70% of the size of the UK economy by 2050.
    Interestingly, Nigeria has the long-term potential to overtake South
Africa as the largest African economy by 2050. This assumes that non-oil based
growth policies implemented in recent years are sustained in the long-run,
something that may prove to be a challenge.
    "As the economies of emerging nations grow, Canada's share of the global
economy is projected to diminish," says Edward Mansfield, an associate partner
with PwC's statistics and economics group. "To maintain our competitive
position, Canadian businesses will have to differentiate through innovation
and technological progress. This will require greater investments in education
and capital equipment to promote the productivity gains necessary for economic
growth. However, as a highly culturally diverse nation, Canada could be well
positioned to capitalize on the growth of emerging markets due to well
established cultural and economic links."
    John Hawksworth, author of the report and head of macroeconomics at PwC,
adds that:
    "The rapid growth of the emerging economies does not mean the demise of
the established OECD economies. In fact it should prove to be a boost for them
through growing income from exports and overseas investments, even as the OECD
share of world GDP declines."
    Retailers should be winners by benefiting from lower cost imports into
their OECD markets while also having the potential to set up new stores in the
E7 countries. China, in particular, is likely to be the second largest
consumer market in the world by 2020, while cities across the leading emerging
markets from Shanghai to Mexico City will have rapidly growing middle class
populations with the spending power to afford Western consumer goods and
services.
    "Non-US trade and investment, both inward and outward, will become even
more important to the Canadian economy as demand from BRICs and emerging
markets continues to grow. This represents an opportunity for Canada to
diversify its trade flows," notes Mansfield.
    Losers are likely to be mass market manufacturers due to increased
Chinese competition. New lower cost competitors like Vietnam will also
increasingly challenge China as the leader of low-cost manufacturing in the
global economy, while China itself moves into higher technology areas just as
Japan and South Korea did in earlier decades.
    The downtrend in Canadian manufacturing is not likely to see much relief
in coming years as emerging markets continue to present significant
competitive pressures in the global goods market. Further, a higher standard
of living in places like China and India may induce highly skilled workers to
stay at home rather than relocate to Canada. This could exacerbate the already
unfavourable labour force demographics in Canada, where lower population
growth is expected to trim the potential growth rate of the economy to around
2.4%.
    To download a copy of 'The World in 2050: Beyond the BRICs', visit
www.pwc.com/world2050.

    
    Table A: Projected relative size of economies in 2007 and 2050
    (US = 100)
    -------------------------------------------------------------------------
    Country               GDP at market exchange        GDP in PPP terms
    (indices with US      rates in US $ terms
    = 100)
                         ----------------------------------------------------
                          2007         2050             2007         2050
    -------------------------------------------------------------------------
    US                    100          100              100          100
    -------------------------------------------------------------------------
    Japan                 32           19               28           19
    -------------------------------------------------------------------------
    China                 23           129              51           129
    -------------------------------------------------------------------------
    Germany               22           14               20           14
    -------------------------------------------------------------------------
    UK                    18           14               15           14
    -------------------------------------------------------------------------
    France                17           14               15           14
    -------------------------------------------------------------------------
    Italy                 14           10               13           10
    -------------------------------------------------------------------------
    Canada                10           9                10           9
    -------------------------------------------------------------------------
    Spain                 9            9                10           9
    -------------------------------------------------------------------------
    Brazil                8            26               15           26
    -------------------------------------------------------------------------
    Russia                8            17               17           17
    -------------------------------------------------------------------------
    India                 7            88               22           88
    -------------------------------------------------------------------------
    South Korea           7            8                9            8
    -------------------------------------------------------------------------
    Mexico                7            17               10           17
    -------------------------------------------------------------------------
    Australia             6            6                5            6
    -------------------------------------------------------------------------
    Turkey                3            10               5            10
    -------------------------------------------------------------------------
    Indonesia             3            17               7            17
    -------------------------------------------------------------------------
    Source: PricewaterhouseCoopers estimates (using UN population
    projections).


    Table B: Projected real growth rates for expanded group of emerging
    market economies: 2007-50 (% per annum)
    -------------------------------------------------------------------------
    Country               GDP in       GDP in          Population    GDP per
                          US $ terms   domestic                      capita
                                       currency or                   at PPPs
                                       at PPPs
    -------------------------------------------------------------------------
    Vietnam               9.8          6.8              0.8           6.0
    -------------------------------------------------------------------------
    India                 8.5          5.8              0.8           5.0
    -------------------------------------------------------------------------
    Nigeria               8.0          6.1              1.6           4.4
    -------------------------------------------------------------------------
    Philippines           7.2          5.2              1.1           4.1
    -------------------------------------------------------------------------
    Egypt                 7.1          5.1              1.1           3.9
    -------------------------------------------------------------------------
    Bangladesh            7.0          5.1              1.1           3.9
    -------------------------------------------------------------------------
    China                 6.8          4.7              0.1           4.6
    -------------------------------------------------------------------------
    Indonesia             6.7          4.5              0.6           3.9
    -------------------------------------------------------------------------
    Pakistan              6.4          4.9              1.4           3.5
    -------------------------------------------------------------------------
    E7 average            6.4          4.5              0.5           4.0
    -------------------------------------------------------------------------
    Malaysia              5.8          4.3              1.0           3.3
    -------------------------------------------------------------------------
    Thailand              5.7          3.6              0.1           3.5
    -------------------------------------------------------------------------
    Iran                  5.2          3.8              0.8           3.0
    -------------------------------------------------------------------------
    Brazil                5.2          3.8              0.7           3.1
    -------------------------------------------------------------------------
    Turkey                5.1          4.1              0.7           3.4
    -------------------------------------------------------------------------
    Argentina             4.9          3.7              0.6           3.0
    -------------------------------------------------------------------------
    South Africa          4.8          3.7              0.3           3.3
    -------------------------------------------------------------------------
    Saudi Arabia          4.8          4.1              1.4           2.7
    -------------------------------------------------------------------------
    Mexico                4.7          3.7              0.5           3.2
    -------------------------------------------------------------------------
    Russia                4.3          2.5             -0.6           3.2
    -------------------------------------------------------------------------
    Poland                3.4          2.1             -0.5           2.7
    -------------------------------------------------------------------------
    G7 average            2.0          2.2              0.3           1.9
    -------------------------------------------------------------------------
    Sources: PricewaterhouseCoopers GDP growth estimates (rounded to nearest
    0.1%), population growth projections from the UN. E7 countries and the E7
    and G7 averages are shown in bold.
    

    This new research uses the same methodology for projecting long-term
economic growth rates as previous PricewaterhouseCoopers reports in the World
in 2050 series in March 2006 (focusing on the E7 economies and the advanced
economies shown in Table A) and September 2006 (focusing on the implications
for global energy consumption, carbon emissions and climate change policy).
But this new report updates the projections to take account of actual
performance in 2006-7, the latest UN demographic projections to 2050 and other
relevant new information. It also extends the analysis to 13 other emerging
economies with the potential to be one of the largest 30 economies in the
world by 2050. Together this 'PwC 30' group of economies accounts for around
85% of world economic output (GDP).

    PricewaterhouseCoopers (www.pwc.com) provides industry-focused assurance,
tax and advisory services to build public trust and enhance value for its
clients and their stakeholders. More than 146,000 people in 150 countries
across our network share their thinking, experience and solutions to develop
fresh perspectives and practical advice. In Canada, PricewaterhouseCoopers LLP
(www.pwc.com/ca) and its related entities have more than 5,200 partners and
staff in offices across the country.
    "PricewaterhouseCoopers" refers to PricewaterhouseCoopers LLP, an Ontario
limited liability partnership, or, as the context requires, the
PricewaterhouseCoopers global network or other member firms of the network,
each of which is a separate and independent legal entity.




For further information:

For further information: Jim Nelson, PricewaterhouseCoopers, (604)
806-7047, jim.nelson@ca.pwc.com

Organization Profile

PwC

More on this organization


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890