U.S. and Chinese national flags flutter outside building.
Teh Eng Koon | AFP through Getty Images
China will overtake the United States to become the world’s largest economy in 2028, five years earlier than previously expected due to the two countries ’different recovery from the Covid-19 pandemic, said a think tank.
“For some time, the broad topic of global economics has been an economic and soft power struggle between the United States and China,” the Center for Economics and Business Research said in an annual report released Saturday. “The widespread and economic release of COVID-19 has certainly exacerbated this conflict in China’s favor.”
The CEBR said the “skilled management of the pandemic” in China, with its tight early lockout, and a focus on long-term growth in the West meant that China’s relative economic performance had improved.
China looked poised for average economic growth of 5.7% per year from 2021-25 before slowing to 4.5% per year from 2026-30.
While the United States was likely to have a strong post-pandemic reversal in 2021, its growth would decline to 1.9% per year between 2022 and 2024, and then to 1.6% thereafter.
Japan would remain the world’s third-largest economy, in terms of dollars, until the early 2030s when it was taken over by India, pushing Germany down from fourth to fifth.
The United Kingdom, currently the fifth largest economy by CEBR, would decline to sixth place by 2024.
However, despite a blow in 2021 since its exit from the EU single market, British GDP in dollars was expected to be 23% higher than the French rate by 2035, with the help of the British economy increasingly important digital media.
Europe accounted for 19% of output in the top 10 global economies by 2020 but will fall to 12% by 2035, or lower if there is a strong EU-Britain divide, the CEBR said.
He also said that the impact of the pandemic on the global economy would be reflected in higher inflation, not slower growth.
“We are seeing an economic cycle with rising interest rates in the mid-2020s,” he said, challenging high-borrowing governments to fund their response to the COVID-19 crisis. the fundamental trends accelerated by this point to a greener and more technical world as we move into the 2030s. ”