Author Topic: 13 year global GDP predictions...  (Read 2416 times)

AZryan

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13 year global GDP predictions...
« on: February 27, 2017, 03:17:51 PM »
New article from a report by PwC "one of the world's largest professional services firms" (I don't know 'em??).

http://www.msn.com/en-us/money/savingandinvesting/these-will-be-the-32-most-powerful-economies-in-2030/ar-AAmGt1f#page=1

Projecting the GDP's of the top 32 countries in 2030 (13 years).

If you compare to current GDPs...
https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nominal)

You can see some places are expected to skyrocket and others stagnate, but it's the growth rates that I think mean the most (when you combine the two lists), and that doesn't match at all to where they are ranked now, or projected to be in 2030.

It says the US. will drop to 2nd place and reach ~$23.5B GDP. Compared to today's ~$18.6, that's about 2% a year growth for this coming 13 years. Our Canadian friends drop from 10th to 18th, but are looking at a better ~2.6% growth. Australia's projected ~1.6% growth (I thought they were doing GREAT??)

No surprise, of course, China will take the top spot (and who here would argue that won't happen?) India reaches 3rd. China's growth rate comes out to be ~10%, but India's is ~18% a YEAR (the best that I happened to notice, but didn't do the figures on everything).

Thoughts? Feelings? Has your world turned upside-down?

maizeman

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Re: 13 year global GDP predictions...
« Reply #1 on: February 27, 2017, 03:30:40 PM »
Eh, these kind of make sense. Australia is doing great, but a lot of it is coming from mining/extractive industries and the downside of those is that after a certain point you start to see diminishing marginal returns from increases investment rather than compounding growth.

I'm kind of surprised about China being projected at 10%/year over the next decade+. It seems they're starting to see the slowing growth that hits countries once their local technology and infrastructure catches up to the current global state of the art so my off the cuff guess would have been more in the 5-7% range. But there's a reason no one pays me to write up these sorts of reports.

aspiringnomad

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Re: 13 year global GDP predictions...
« Reply #2 on: February 27, 2017, 08:46:20 PM »
1) I hate these ranking "articles" that make you click through the entire list.

2) PwC = PricewaterhouseCoopers, one of the Big 4 accounting and consultancy firms. Certainly world renowned, but as of last night mostly for poor envelope management.

3) Sorry, but your growth rate calculations are mostly meaningless, because the PwC ranking adjusts for purchasing power parity, while your Wikipedia data does not. That makes a big difference for places with significantly different costs of living than the US, like China and India. Good thing for the rankings because there is near 0% chance that China averages 10% annual growth and India 18% over the next 13 years.

AZryan

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Re: 13 year global GDP predictions...
« Reply #3 on: February 27, 2017, 10:22:16 PM »
"-PwC = PricewaterhouseCoopers,-"

Yeah, I caught that after I posted. I never saw PwC written like that.

"-your growth rate calculations are mostly meaningless, because the PwC ranking adjusts for purchasing power parity, while your Wikipedia data does not.-"

I wondered if that might be the case. Do you see zero value at all in it?

aspiringnomad

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Re: 13 year global GDP predictions...
« Reply #4 on: February 27, 2017, 10:53:19 PM »
Do you see zero value at all in it?

The PwC prognostications themselves look reasonable based on demographic projections, recent trends, and current baselines, but it has little value from an investing perspective because the rough numbers are already priced into markets.

Your calcs do need revising to be accurate, which means adjusting for PPP if you want to use the PwC projections. Otherwise it's not really apples-to-apples.

marty998

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Re: 13 year global GDP predictions...
« Reply #5 on: February 27, 2017, 11:40:23 PM »
1.6% is too low for Australia. The population is growing by that much each year.. .so are they effectively saying that we will stagnate for 13 years?

Also... our mining boom ended 5 years ago. Please stop referring to Australia as a quarry. We are now solely focused on building apartment blocks and turning our cities into Bangkok slums.

Also, China is growing at 6% (not 10%) and even 6% is a rubbery figure. However, you can't grow at 6% forever when you are already so large. I would expect to see China at 4% quite soon. It won't cause the world to slow, because in absolute terms 4% growth on a huge base is better than 6% growth on a smaller base.

nassoro

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Re: 13 year global GDP predictions...
« Reply #6 on: February 28, 2017, 06:05:50 AM »
And those are all actually for 2050, so 33 years out.  (the MSN article got it wrong).  The source material: http://www.pwc.com/world2050 For me, this graphic tells the most interesting story: http://www.pwc.com/gx/en/world-2050/assets/world-in-2050-image4.png

bwall

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Re: 13 year global GDP predictions...
« Reply #7 on: February 28, 2017, 12:00:11 PM »
Any forecast going out 33 years is going to be waaaay off the mark. Economists cannot even accurately predict the economic growth rate for 2017, so how can they get anything right 33 years out?

Also; it's based on PPP, which isn't an accurate reflection of the size of an economy. It's an accurate measure of the standard of living across economies ($10k/year income is China goes further than $10k/year income in the USA). But, if want to buy products in different countries, or measure how big the economy is, PPP is a horrible measure to do that.

nereo

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Re: 13 year global GDP predictions...
« Reply #8 on: February 28, 2017, 12:43:55 PM »
^ Agreed about long-term predictions.
Economic forecasts have a long history of being laughably wrong.  Morgan Housel wrote an excellent piece highlighting how 22 "chief market strategiests" from the largest banks have made predictions about the stock market over the next YEAR and have collectively their estimates have been worse than someone just picking an average gain year after year.  Horribly, laughably bad.

There was an entire decade when almost everyone was convinced Japan would be the worlds largest economy.  Then it was China by 2005, wait, 2007, wait, 2009...  In the mid 90s great economists thought Brazil was going to crack the top 5 in 10 years.  Black swan events swallow some (Iceland comes to mind) and recessions can disrupt formerly strong economies for a decade or more (e.g. Spain, Greece).

My solution would be to make a pie chart each country represented by its current GDP, then put on a blindfold and throw darts at it estiamte future growth.  It won't be very accurate, but it could very well be better than these 'expert' predictions.

maizeman

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Re: 13 year global GDP predictions...
« Reply #9 on: February 28, 2017, 01:21:05 PM »
I'd argue PPP is actually a better measure of the size of countries' economies. Otherwise you have to argue that if the Chinese government decides to push the value of the RMB down 10% that actually causes the economy of China to shrink by 10%, or whenever people in the EU get worried about a breakup and start sending all their money into swiss banks, driving up the value of the Franc, that it actually grows the swiss economy.

But it's still correct you obviously cannot calculate growth rates comparing some GDP numbers adjusted for PPP and some not adjusted for PPP.

talltexan

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Re: 13 year global GDP predictions...
« Reply #10 on: March 02, 2017, 07:08:32 AM »
The tricky thing about growth rates under PPP is that they're not exactly including inflation, but not exactly excluding it (for companies that depend heavily on trade, such as China and India). I think they'd look weird when compared to anything else we are used to seeing in the news.

powskier

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Re: 13 year global GDP predictions...
« Reply #11 on: March 09, 2017, 01:30:55 PM »
Is there a chart that shows how they predicted current growth rates 10 , 20, 30 years ago? This would go a long way towards lending some credibility.

+1 on hating lists that force you to click new page for each one, by definition clickbait.

I am of the Monty Python school of learning and since nobody expected the Spanish inquisition it is fair to say that a decade out GDP predictions are random guesses.

Tom Bri

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Re: 13 year global GDP predictions...
« Reply #12 on: March 09, 2017, 03:32:45 PM »
Back in the early 1990s Thailand was an 'Asian Tiger'. Then Soros crashed the money and it has returned to being a normal marginal economy ever since. But boy Bangkok was a hopping place for a few years, supercharged construction going up everywhere.
China is teetering on the edge of several different cliffs, social, political, economic, all at the same time. Maybe they can beat gravity and maybe they can't, but I am not betting on it.

bacchi

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Re: 13 year global GDP predictions...
« Reply #13 on: March 09, 2017, 04:31:18 PM »
Is there a chart that shows how they predicted current growth rates 10 , 20, 30 years ago? This would go a long way towards lending some credibility.

https://www.theguardian.com/commentisfree/2014/sep/02/limits-to-growth-was-right-new-research-shows-were-nearing-collapse

2020 is an important year.

Leisured

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Re: 13 year global GDP predictions...
« Reply #14 on: March 10, 2017, 04:32:03 AM »
Thank you AZryan for the link. The article tells us that advanced economies eventually reach a plateau of machine production. We can afford cars, washing machines and refrigerators, but once we have those, we can never afford private yachts and private jets.

Seen from that point of view, then we expect that well managed middle income nations will reach rich country level, then stay at a plateau, the size of their economies being largely determined by their population size.

Argentina has been famously mismanaged for decades, but could come good. When Japan got modern at the start of the Meiji era, about 1870, Japan feared that China would also become modern and powerful. As it turned out, China took another hundred years to get modern.