INDIA SUPER POWER :


India will emerge as the economic superpower in 2050, beating United States and China, according to The Wealth Report 2012. This report was published by KnightFrank.Com and CitiPrivateBank.Com.

The report states that by 2050, India will become the economic superpower, with a GDP of $85.97 trillion, while U.S will have – $39.07 trillion. India will also witness an economic growth of 8.0 percent by 2050.

Grainne Gilmore, Head of U.K. Residential Research at Knight Frank, has spearheaded this research. According to Ledbury Research, specializing in monitoring global wealth trends, the number of people with $100 million plus worth of assets have increased by 29 percent since 2006 and are this number is expected to rise.
There was a marked growth in the global economy in 2011 but it was slower than that exhibited in 2010. The U.S. grew only by 1.8 percent, while the euro zone grew at a meager 1.6 percent during 2011. When compared to the West, Asia performed better, with an economic growth of 7.9 percent. Danny Quah, professor at London School of Economics, says that the “world’s economic centre of gravity” or focal point of economic activity in terms of GDP (Gross Domestic Product), will shift towards India and China in the future.

Almost all investors are betting on emerging nations for their money. However, it is predicted that not all such countries will prosper at the same rate. International Monetary Fund (IMF), however, said that would face a “hard landing” due to asset price growth and buoyant credit, which have instigated consumer demand. IMF predicts a growth rate of 5.4 percent in 2012 and 5.9 percent in 2013 for emerging countries.

Citi makes a forecast that the share of real GDP of North America and Western Europe will dip to just 18 percent in 2050 from 41 percent in 2010. On the contrary, Asia’s share will rise to 49 percent from 27 percent. China will overtake the U.S. as the world’s largest economy by 2020, while India will become so in 2050.

Citi research also states that India and China will grow tremendously in the coming 40 years. Still, many other nations will also exhibit significant growth. It is surprising to find Brazil and Russia absent from Citi’s list of Global Growth Generators (3G) nations. This is so because Brazil and Russia are part of the BRIC nations. On the other hand, Citi includes the following nations in its list – Vietnam, Sri Lanka, Philippines, Nigeria, Mongolia, Iraq, Indonesia, Egypt and Bangladesh.

Willem Buiter, Citi’s Chief Economist, quotes, “All of these countries are poor today and have decades of catch-up growth to look forward to. Some of them, including Nigeria, Mongolia, Iraq and Indonesia, also have large natural resources that we hope will be more beneficial than they so often have been in the past.”

A few other countries to be watched out for, as given by Citi, are – Iran, Thailand, Turkey, Mexico and even Brazil. These nations will first have to mend their political structures before making it to the 3G list.

The East is going to emerge as the new global hotspots of High Net Worth Individuals (HNWIs). There will also be significant growth in the number of centa-millionaires in the regions of South-East Asia, Japan and China. Ledbury Research predicts that by 2016, there will be more than 26,000 centa-millionaires in these regions, while Western Europe will have 15,000 and North America – 21,000.

James Lawson, Director at Ledbury Research, says, “We believe the number and concentration of centa-millionaires accentuates the trajectory of current global wealth flows.” Lawson further says, “Trends seen in this wealth bracket are likely to be replicated in lower wealth tiers in years to come.”

These forecasts are based on economic performance of nations in the Asia-Pacific. Though GDP is not the deciding factor here, major opportunities for generating large wealth is abundant here.

Lawson further quotes, “To amass this sort of wealth means there must be an alignment between opportunity and ability. For those who make more than $50m, the opportunity usually arises because of a major liquidity event, and these are more common, and can be tapped into more readily, in fast-moving economies.” He further says, “Just looking at the wealthiest in some emerging markets, you can see the sectors where they are generating their wealth include natural resources, manufacturing or construction.”

Buiter adds, “As part of the process of fast economic growth, vast wealth will be created. The distribution of that wealth will be dictated by political factors as much as the economic process itself, but there will be high returns from investment in skills and education.”

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