Dreaming With BRICs: The Path to 2050

• Over the next 50 years, Brazil, Russia, India and China—the BRICs economies—could become a much larger force in the world economy. Using the latest demographic projections and a model of capital accumulation and productivity growth, we map out GDP growth, income per capita and currency movements in the BRICs economies until 2050.
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  The results are startling. If things go right, in less than 40 years, the BRICs economies together could be larger than the G6 in US dollar terms. By2025 they could account for over half the size of the G6. Currently they are worth less than 15%. Of the current G6, only the US and Japan may be among the six largest economies in US dollar terms in 2050.
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  About two-thirds of the increase in US dollarGDPfrom the BRICs should come from higher real growth, with the balance through currency appreciation. The BRICs’ real exchange rates could appreciate by up to 300% over the next 50 years (an average of 2.5% a year).
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  As early as 2009, the annual increase inUS dollar spending from theBRICs could be greater than that from the G6 and more than twice as much in dollar terms as it is now. By 2025 the annual increase in US dollar spending from the BRICs could be twice that of the G6, and four times higher by 2050.
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  As today’s advanced economies become a shrinking part of the world economy, the accompanying shifts in spending could provide significant opportunities for global companies. Being invested in and involved in the right markets—particularly the right emerging markets—may become an increasingly important strategic choice.

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  Brazil. Over the next 50 years, Brazil’s GDP growth rate averages 3.6%. The size of Brazil’seconomy overtakes Italy by 2025; France by 2031; UK and Germany by 2036.
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  China. China’s GDP growth rate falls to 5% in 2020 from its 8.1% growth rate projected for 2003. By the mid-2040s, growth slows to around 3.5%. Even so, high investment rates, a large labor force and steady convergence would mean China becomes the world’s largest economy by 2041.
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  India. While growth in the G6, Brazil, Russia and China is expected to slow significantly over the next 50 years, India’s growth rate remains above 5% throughout the period. India’s GDP outstrips that of Japan by 2032. With the only population out of the BRICS that continues to grow throughout the next 50 years, India has the potential to raise its US dollar income per capita in 2050 to 35 times current levels. Still, India’s income per capita will be significantly lower than any of the countries we look at.
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  Russia. Russia’s growth projections are hampered by a shrinking population (an assumption that may be too negative). But strong convergence rateswork to Russia’s benefit, and by 2050, the country’s GDP per capita is by far the highest in the group, and comparable to the G6. Russia’s economy overtakes Italy in 2018; France in 2024;UK in 2027 and Germany in 2028.
  

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From Global Economics Paper No. 99: Dreaming with BRICs: The Path to 2050