Global Economics View Global Growth Generators: Moving beyond ‘Emerging Markets’ and ‘BRIC’ - Citigroup

ƒÞ We intend to systematically research the global generators of growth for the future - in this note, we focus on countries, but in principle our universe encompasses regions, cities, commodities, asset classes, activities, and products.

ƒÞ We expect strong growth in the world economy until 2050, with average real GDP growth rates of 4.6% pa until 2030 and 3.8% pa between 2030 and 2050 ¡V as a result, world GDP should rise in real PPP-adjusted terms from 72 trillion USD in 2010 to 380 trillion USD in 2050.

ƒÞ Developing Asia and Africa will be the fastest growing regions, in our view, driven by population and income per capita growth, followed in terms of growth by the Middle East, Latin America, Central and Eastern Europe, the CIS, and finally the advanced nations of today.

ƒÞ China should overtake the US to become the largest economy in the world by 2020, then be overtaken by India by 2050.

ƒÞ 'This time it's different': many EMs have either opened up already or are expected to do so, and have reached a threshold level of institutional quality and political stability.

ƒÞ For poor countries with large young populations, growing fast should be easy: open up, create some form of market economy, invest in human and physical capital, don't be unlucky and don¡¦t blow it. Catch-up and convergence should do the rest.

ƒÞ Bangladesh, China, Egypt, India, Indonesia, Iraq, Mongolia, Nigeria, Philippines, Sri Lanka and Vietnam have the most promising (per capita) growth prospects ¡V they are our 3G countries.

ƒÞ Institutions and policies are more important for growth once countries have achieved a fair degree of convergence.

ƒÞ Growth will not be smooth. Expect booms and busts. Occasionally, there will be growth disasters, driven by poor policy, conflicts, or natural disasters. When it comes to that, don't believe that 'this time it's different'.