A new report from the stable of PwC has predicted that Nigeria could move up the GDP rankings in Africa from 22nd place to 14th by 2050.
However, the report titled: “The Long View: How will the global economic order change by 2050?” advised policy makers in Nigeria to put necessary measures in place.
According to the report, Nigeria will only realise this potential if it can diversify its economy away from oil and strengthen its institutions and infrastructure.
The report also explained that Colombia and Poland exhibit great potential, and are “projected to be the fastest growing large economies in their respective regions, Latin America and the EU (though Turkey is projected to grow faster within the wider European area).
It explained further that growth in many emerging economies will be supported by relatively fast-growing populations, boosting domestic demand and the size of the workforce.
This will, however, need to be complemented with investment in education and an improvement in macroeconomic fundamentals to ensure there are sufficient jobs for growing numbers of young people in these countries.
Making reference to policymakers, the report said: “To realise this economic potential, emerging market governments need to implement structural reforms to improve their macroeconomic fundamentals and institutions”
The report details the great potential that emerging economies have to grow and prosper over the coming decades.
“But, to realise this potential, they must undertake sustained and effective investment in education, infrastructure and technology.
It explained that adverse global conditions and a falling oil price over recent years have highlighted the importance of diversified economies for long-term sustainable growth.
The report read: “Underlying all of this is the need to develop their political, economic, legal and social institutions to generate incentives for innovation and entrepreneurship, creating secure and reliable economies in which to do business.
“Looking forward, the global economy faces a number of challenges to prosperous economic growth. Structural developments, such as ageing populations and climate change, require forward-thinking policy which equips the workforce to continue to make societal contributions later on in life and promotes sustainable development.
“Falling global trade growth, rising inequality and increasing global uncertainties are intensifying the need to create diversified economies which create opportunities for everyone in a broad variety of industries.
“Businesses need to adopt flexible, dynamic and patient strategies to navigate these rapidly evolving and maturing emerging markets.
“Emerging market development will create many opportunities for business. These will arise as these economies progress into new industries, engage with world markets and as their populations – which will also be more youthful on average than in advanced nations – get richer. As these emerging countries develop their institutions, fostering social stability and strengthening their macroeconomic fundamentals, they will become more attractive places to do business and live, attracting investment and talent”.
Chief Economist, PwC UK, John Hawksworth, said: “After a year of major political shocks with the Brexit vote and the election of President Trump, it might seem brave to opine on economic prospects for 2017, let alone 2050.
“However, I still think it is important to take a longer term view of global economic prospects that looks beyond the short-term ups and downs of the economic and political cycle, which are indeed very difficult to forecast. Instead our approach in this report, based on a rigorous modelling approach, focuses on the fundamental drivers of growth: demographics and productivity, which in turn is driven by technological progress and diffused through international trade and investment.
“Such forces saw America progress through the 19th and early 20th centuries to become the largest economy in the world despite a civil war, various other conflicts with foreign powers, three presidential assassinations, and numerous economic and financial crises. These forces also helped global economic growth to bounce back strongly from two world wars and a Great Depression to reach record levels in the post-war decades.
“Looking ahead, we think they will see emerging economies come to dominate the 21st century. By 2050 we project China will be the largest economy in the world by a significant margin, while India could have edged past the US into second place and Indonesia have risen to fourth place.
“The EU27’s share of global GDP could have fallen to below 10%. We also think the world economy will more than double in size between now and 2050, far outstripping population growth. I think this kind of long-term view, looking beyond short-term economic and political cycles, is particularly useful for policymakers and businesses in areas like pensions, healthcare, energy and climate change, transport, housing and other types of infrastructure investment. Challenges for policymakers Of course, we should not dismiss political shocks like Trump or Brexit to the extent they point to deeper structural shifts, notably a populist backlash against globalisation, automation and the perceived impact of these trends in increasing income inequality and weakening social cohesion.
“These trends pose real policy challenges across the developed world and beyond and, as we discuss in Section 4 of this report, there is no silver bullet to address these concerns. They require determined efforts by governments to boost the quality of education and training, and address perceived unfairness through well- targeted fiscal policies.
“They also require real political leadership to resist calls for increased protectionism and maintain momentum on longer term issues like climate change and global poverty reduction. Opportunities for business From a business perspective, there is also a need to look beyond short-term economic volatility in both advanced and emerging economies and develop strategies that have the right balance of flexibility and patience.
“As we discuss in Section 5 of the report, this requires a clear focus on identifying and building on core capabilities, while remaining flexible enough to ride out short term political and economic storms of the kind we have seen in both advanced and emerging economies in recent years. Overall, though, I remain optimistic that governments and businesses can rise to these challenges and deliver the continued increases in global living standards that we project in this report”.
