Asia to glow, even during the day

By 2050, the world will have enough evidence to prove that this is indeed the ‘Asian Economic Century.’ By then, according to estimates by a global think tank, the centre of “economic gravity” will truly swing towards Asia, and away from North America and Europe. The epicentre of global economic power will move East. Of the 10 largest economies in 2050, according to Goldman Sachs’ predictions, three will be Asian, and two of them, China and India, will be ranked No. 1 and 3, respectively. Indonesia, surprisingly, will occupy the fourth position, above Germany, Japan, the UK, and Russia. Together, the three Asian nations, will comprise a combined GDP of more than $70 trillion, or more than half of the top 10 collectively. Among the top 20 will be three more Asian nations, including a not-so-surprising South Korea, but shockingly, Pakistan (No. 16) and Bangladesh (No. 20).

But Goldman Sachs’ focus is not on Asia per say, which includes developed and emerging nations, but on the latter, Emerging Asia. According to the think tank, “By 2050, the economies of emerging Asia could account for around 40 per cent of the world’s total output, equivalent to $90.6 trillion. In comparison, the share of the so-called developed western economies will be 36 per cent, or $82.9 trillion. Behind them will be the nations in central and eastern Europe, the Middle East, and Africa with a 17 per cent share, and Latin America with seven per cent. Among the emerging Asian economies, while the GDP growth of China will “taper off significantly” by 2050, countries like India, Bangladesh, Pakistan, and the Philippines will “remain above three per cent annually.” So, the loss of steam in China will be picked up by India, which will be a $22-trillion-plus economy by 2050. Yet, it will still be almost half of China’s size.

Goldman Sachs cites several reasons for the phenomenal growth of ‘Emerging Asia’ over the next two-and-a-half decades. These include demographics, urban expansion, governance, technology, and convergence. Both India and Indonesia, which will be among the top four by 2050, have large sections of youngsters, who are entering, and will enter, the workforce, which will push up productivity, growth, and overall GDP and output of the two nations. In contrast, the developed world is saddled with aging societies, and shrinking labour pools. While artificial intelligence (AI) will help the developed nations to push productivity with minimal workers, the trend will peter out as the rest of the world catches up fast. In this century, the flow of tech, and its adoption is faster than the previous one, or the ones before. The western world cannot latch on to the tech advantages for too long.

Hectic migration to urban cities, and massive expansion of the existing cities, will be a feature of ‘Emerging Asia.’ In the western world, the aging societies will move towards the comforts of the suburbs, which will be less-congested, and cheaper to live in. While the cities in the West may witness a wave of depopulation, as is happening with mega US cities like New York, those in the East will grow exponentially. This will fuel urban consumption, spur infrastructure, and lead to higher and additional productivity gains. The living standards may be less than desired, and cost-of-living may be higher than required, but the benefits to the economy will be phenomenal. Hence, while the West chooses comforts, the East will confront challenges and difficulties, only with the ambitions and aspirations to beat the West. In effect, rapid urban development will attract talent from abroad too, as is the case now.

Over the past decade or so, the ‘Emerging Asia’ is catching up on technology. Today, China can compete with America in areas such as AI, robotics, and semiconductors. There is a fear that in some respects, China may be ahead of the US, and the former is winning this century’s tech race. The same is true with India, as even the global tech giants wish to make the former the hub for future hardware and software needs. More data centres will be set up in India, and the global capability centres will rearrange the world’s tech order to an extent. According to a media report, “Technology and industrial upgrades play a crucial role. Manufacturing hubs in China, Vietnam, and Thailand have steadily moved up the value chain, producing everything from advanced electronics to electric vehicles. As income rises, these economies are also becoming major consumer markets.” Tech transition may shift eastwards; it has found an alternate centre in China.

With tech adoption, and assimilation, comes economic convergence. Emerging nations grow faster because they use new-age tech, and business models pioneered in the western world. Thus, the former either reverse-engineer tech to suit their specific needs, or send people abroad to learn about new tech, and return to adopt them at home. Similarly, new firms and start-ups learn from existing and emerging overseas business and management models. The transition from elsewhere to home is faster because the world is a global village. As billions of people in ‘Emerging Asia’ climb the income and productivity ladder, even as the West outsources its products and services, the former grow faster, and become larger compared to the latter. Emerging nations such as Indonesia, Egypt, and Nigeria have more energy to grow, and become bigger. The erstwhile powerful nations like Germany, Japan, France, and the UK remain influential but command an increasingly smaller slice of the world’s GDP and output pie.

Despite the Asian advantage, experts do not believe that the world will become a truly Asian order. In terms of economics, it will still be a multipolar globe, with powerful centres in America, Europe, Asia, and even Central Asia and Middle East. Prosperity, despite the rankings or sizes, will spread across the globe, and across continents, despite the growing inequalities between the nations. Indeed, the biggest lesson from the Goldman Sachs’ extrapolation may not be the focus on ‘Emerging Asia’ but a realisation that the world will not depend on, or belong to, one region. It will belong to several striving populations, and communities, each with their own ambitions and aspirations. China may be No. 1 but it will consistently be pushed and nudged by America. India will be No. 3 but Europe will not allow it to relax. In 2075, India may be No. 2, just behind China, and just ahead of America.