Why the next three decades will be dominated by emerging Asian countries

According to a study by the Abrdn Research Institute, emerging Asian economies, not just China, are poised to outperform until 2050 and beyond. The study identifies five reasons that will enable emerging Asian countries to grow more than other nations in the next three decades. By 2050, four of the world’s seven largest economies will be in Asia. In addition to China becoming the world’s top economy by 2035, India could reach the fourth position in the early 2030s, and Indonesia is expected to become the seventh-largest global economy.

The dominance of Asia is further highlighted, with Japan securing the fifth position. The analysis also predicts that the Philippines, Pakistan, Bangladesh, and Vietnam will be among the top 25 global economies.

Contributing to global growth

Abrdn’s research indicates that the contribution of emerging Asia to global growth will reach 58% by 2050, despite a slowdown in global growth to 1.5%. Asia’s potential to outperform is attributed to a more favorable demographic outlook and the opportunity to catch up with developed markets. In many Asian countries, income levels are still relatively low, providing ample room for workers to transition from the agricultural sector to more productive sectors, such as manufacturing and services. Many companies have yet to leverage technologies and processes to become industry leaders and enhance productivity. Demographic Advantage Demographics play a crucial role in favor of emerging Asian economies. By 2050, the populations of India and Indonesia are projected to increase by 253 million and 42 million, respectively. Moreover, in other countries with less favorable demographic curves, improvements in dependency ratios and workforce quality through training and skill development are expected.

Rising consumption

Manufacturing remains the heart of Asian economic growth. Despite the trend towards reshoring production lines, reallocation will not happen soon. Additionally, with increasing urbanization and personal incomes, Asia is set to fuel global consumption of goods and services. China’s consumer market is already half the size of the U.S., and by 2050, it could be nearly 10% larger, reaching $25 trillion. Over the next 30 years, the size of the Indian consumer market is expected to quadruple, while in the eurozone, consumption is projected to grow only by 18% during the same period.