Half of the world's economy will be dominated by China, India, and Indonesia by 2060, shifting the focus of the worldwide financial systems on Asia from the United States according to an outlook recently released by the Organization for Economic Cooperation and Development or OECD.
The report said India's economy might surpass the United States in 2037 and by 2040 China's economy will be 77 percent bigger in dollars than that of Washington. As a result, the economies of these two countries and the wealth of Indonesia combined together will represent 50 percent of the world's economy according to the OECD report.
The OECD analyzed several economic factors across its 35 member countries comprised of 18 European nations, the United States, and Canada, including 12 non-member nations from Asia, Africa, Latin America, and the Caribbean. The metrics for analysis include the countries' capital stock, employment growth, productivity, and labor expansion plans.
The report may indicate that China will be resilient to the ongoing trade war it has with the United States and the country's effort at present will be proven successful in the long run. Zhigang Tao, a Hong Kong University economist, said China has always demonstrated its ability to do a balancing act between economic challenges and achieving quality growth.
For Beijing to survive its tariff war with Washington, Chinese officials instructed its banks to lend more money in the local governments for them to lead new and existing projects that are supposedly headed by international corporations but are now affected by the trade tensions.
In fact, the trade war had only resulted in the minor dent to China's $12 trillion economies, The New York Times reported. In the event that the trade conflict with the United States perseveres, its banks could accommodate to lend more money to strengthen its local economies for the meantime.
Indeed, China's central bank announced on Aug. 10 that it would ensure that local companies were given necessary financial credits. On Aug. 11, it again announced that credits will be extended to exporters, small and medium enterprises, and other stalled infrastructure developments. These projects include construction of subway and light rail lines in Changchun where Toyota has several facilities.
Indonesia, meanwhile, posted economic growth more quickly during the second quarter compared to the first quarter according to Reuters. Several analysts estimated that the country will attain 5.20 percent growth this year compared to its 5.07 percent growth achievement in 2017. The National Development Planning Agency said the Asian Games between August and September, as well as the World Bank-IMF annual meetings in October, will contribute greatly to Indonesia's economic growth.
With regard to India, the International Monetary Fund noted it remains the fastest growing economy worldwide. Ranil Santiago, the head of IMF team for India, said the country's growing wealth is brought by goods and services tax as well as increasing number of foreign investors. Santiago said the IMF is expecting India to post a 7.3 percent increase for the fiscal year 2018 to 2019 compared to its 6.7 percent growth in 2017.
