“Our projections imply that we have passed the high-water mark of global potential growth."
Goldman Sachs Group Inc. economists have taken a stab at predicting the path of the world economy through 2075.
Two decades since they famously outlined long-term growth projections for the so-called BRIC economies, the economists now led by Jan Hatzius expanded their projections to encompass 104 countries over the next half-century.
Global growth will average just under 3% a year over the next decade, down from 3.6% in the decade before the financial crisis, and will be on a gradually declining path afterwards, reflecting a slowing of labor force growth.
Emerging markets will continue to converge with industrial nations as China, the US, India, Indonesia and Germany top the league table of largest economies when measured in dollars. Nigeria, Pakistan and Egypt could also be among the biggest.
The US is unlikely to repeat its relative strong performance of the last decade, and the dollar’s exceptional robustness also unwind over the next 10 years.
While income inequality between countries has fallen, it will continue to rise within them.
Economists Kevin Daly and Tadas Gedminas saw protectionism and climate change as risks that are “particularly important” both for growth and the convergence of incomes.
“Our projections imply that we have passed the high-water mark of global potential growth,” the economists wrote in the note. “Most of this projected slowdown is due to demographics. Global population growth has halved over the past 50 years.”
They said slower population growth is “a good problem to have” because it implies less strain on the environment. Nevertheless, it will present “a number of economic challenges,” like how nations will pay for rising health costs of their aging populations.