London: The think tank stated that due to the sharp contrast between the two countries’ recovery from the Covid-19 pandemic, China will surpass the United States as the world’s largest economy in 2028, five years earlier than previously estimated.
The Center for Economic and Business Research said in its annual report released last Saturday: “For some time, the primary theme of global economics has been the economic and soft power struggle between China and the United States.”
“The Covid-19 pandemic and the corresponding economic impact must have made up for this competition with the support of China.”
CEBR stated that China̵
Starting from 2021-25, China is expected to grow at an average annual rate of 5.7%, and then slow to 4.5% per year from 2026-30.
Although the United States may rebound strongly after the 2021 pandemic, between 2022 and 2024, the United States’ annual growth rate will slow to 1.9% and then drop to 1.6%.
In dollar terms, Japan will remain the world’s third-largest economy until it will be overtaken by India in the early 2030s, thereby dropping Germany from fourth to fifth.
The UK is currently the fifth largest economy as measured by CEBR, and will fall to sixth place from 2024.
However, despite the blow to the EU’s single market exit in 2021, due to the UK’s leading position in the increasingly important digital economy, by 2035, UK GDP in US dollars is still expected to be 23% higher than France’s.
CEBR said that by 2020, Europe will account for 19% of the world’s top ten economies, but by 2035, this number will fall to 12%. If there is a sharp split between the EU and the UK, it will Lower it down.
The report also said that the impact of the pandemic on the global economy is likely to show up in higher inflation rather than slower growth.
It said: “We are seeing an economic cycle of rising interest rates in the mid-2020s.” This poses a challenge for governments that borrow heavily to deal with the Covid-19 crisis.
“But as we step into the 2030s, the underlying trend accelerated by this suggests that the world will be greener and more technology-based.”