PHL to be 6th fastest growing economy in next 40 years – wealth report

The Philippines is projected to have the world’s sixth fastest growing economy in the next 40 years, according to Knight-Frank and Citi Private Bank’s 2012 Wealth Report. The report predicted that the Philippines will have an average yearly gross domestic product growth of 7.3 percent from 2010 to 2050.

The country will surpass Mongolia at 6.9 percent, Indonesia’s 6.8 percent, Sri Lanka’s 6.6 percent and Egypt’s 6.4 percent.

Nigeria topped the Wealth Report ranking with a GDP growth of 8.5 percent, followed by India at 8 percent, Iraq at 7.7 percent, Bangladesh at 7.5 percent and Vietnam at 7.5 percent.

“Citi research shows that while China and India are likely to grow rapidly over the next 40 years, there are other key countries with promising chances for growth that do not necessarily match the traditional assumptions about where future growth will emanate from,” said Grainne Gilmore, Knight Frank’s head of UK Residential Research.

Thus, instead of including Brazil and Russia on its list of Global Growth Generators (3G), “Citi include[d] countries such as Bangladesh, Egypt, Indonesia, Iraq, Mongolia, Nigeria, Philippines, Sri Lanka and Vietnam on this list,” the head researcher said.

Willem Buiter, Citi’s chief economist, defined 3G as the “countries, regions, cities, trade corridors, sectors, industries, firms, technologies, products and asset classes that over the next five, 10, 20 and 40 years are expected to deliver high growth and profitable investment opportunities.”

“All of these countries are poor today and have decades of catch-up growth to look forward to,” Gilmore added.

Meanwhile, Europen countries dominated the bottom 10 of the Wealth Report as they have the lowest projected GDP growth. Spain and France were ranked at the bottom at 2 percent; Sweden, Belgium and Switzerland at 1.9 percent; Austria at 1.8 percent; the Netherlands and Italy at 1.7 percent; Germany at 1.6 percent; and Japan at 1 percent.

End to Western hegemony

Consistent with the region’s growth, Knight-Frank and Citi Private Bank also noted a “shifting emphasis to the East” when it comes to a majority share in global GDP.

This would signal an “end to Western hegemony” in terms of economic growth, Gilmore said.

Developing Asia – which accounted for 27 percent of global GDP in 2010 – is predicted to have a 44 percent share of the total world economic growth in 2030. This could even grow further to 49 percent in 2050, the report said.

Meanwhile, North America – currently at 22 percent in 2010 – is predicted to contract to 15 percent in 2030 and 11 percent in 2050. Western Europe's share of 19 percent in 2010, will decline to 11 percent in 2030 and 7 percent in 2050.

“China will overtake the US to become the world’s largest economy by 2020, which in turn will be overtaken by India in 2050,” Gilmore noted.

The report thus called countries in the Asia Pacific region as the “new world players” in global growth.

“Many poor economies have opened up and reached the modicum of institutional quality and political stability that are needed for fast growth and rapid catchup,” Buiter explained.

Meanwhile, in terms of wealth distribution, the report noted that the region covering South East Asia, China and Japan currently has 18,000 centa-millionaires (or those who are worth $100 million or more), more than North America's 17,000, and Western Europe's 14,000.

London-based Ledbury Research foresees that in 2016 “the region will have extended its lead with 26,000 centa-millionaires, compared with 21,000 in North America and 15,000 in Western Europe.”

“We believe the number and concentration of centa-millionaires accentuates the trajectory of current global wealth flows,” said James Lawson, director at Ledbury Research, a company partner of the Market Research Society. “Trends seen in this wealth bracket are likely to be replicated in lower wealth tiers in years to come.”

Progress shift to the east

The report cited London School of Economics professor Danny Quah, who “calculated that the world’s economic centre of gravity – the average location of economic activity by GDP – is on the move.”

Quah calculated that in 1980, the world’s economic center of gravity – “a theoretical measure of the focal point of global economic activity based on GDP” – was in the middle of the Atlantic. By 2050, however, the “steady rise of emerging economies in Asia will have pushed the theoretical centre of gravity … to somewhere between China and India by 2050,” Knight Frank and Citi said.

Quah predicted that “political influence will follow a similar trajectory eastwards.” — DVM, GMA News