India, other emerging economies to make for half of global growth
By 2025, India and five other major emerging economies – Brazil, China, Indonesia, South Korea and Russia – will account for more than half of all global growth, a new World Bank report says.
As a result, the international monetary system will likely no longer be dominated by a single currency, the report, Global Development Horizons 2011 – Multipolarity: The New Global Economy, released Tuesday suggests.
As Economic power shifts, these successful economies will help drive growth in lower income countries through cross-border commercial and financial transactions, it said.
To sustain growth and cope with more complex risks, economies that are home to emerging growth poles need to reform their domestic institutions, including in the economic, financial and social sectors, the report added.
China, Indonesia, India and Russia all face institutional and governance challenges. Human Capital and ensuring access to education is a concern in some potential growth poles, particularly Brazil, India and Indonesia.
The report projects that as a group, emerging economies will grow on average by 4.7% a year between 2011 and 2025.
Advanced economies, mean while are forecast to grow by 2.3% over the same period, yet will remain prominent in the global economy, with the Euro area, Japan, Britain and the USA all playing a core role in fuelling global growth, “the fast rise of emerging economies has driven a shift whereby the centers of economic growth are distributed across developed and developing economies – it’s a truly multipolar world”, said Justin Yifu Lin, the World Bank’s Chief Economist and Senior Vice President for development economics.
Over the next decade or so, China’s size and the rapid globalization of its corporations and banks will likely mean a more important role for the RMB, said Mansoor Dailami, lead suthor of the report and manager of emerging trends at the World Bank.
The most likely global currency scenario in 2025 will be a multi-currency one centered on the dollar, euro and the RMB.
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