China will overtake the United States to become the world's largest economy in 2028, five years earlier than previously thought, due to the two countries' different recovery from the COVID-19 pandemic, according to the CEBR Center for Economic and Business Research Center's annual report released on Saturday.
Analysts said China's “skillful management of the pandemic,” with its strict early isolation and blows to long-term growth in the West, means China's relative economic performance has improved.
In China, it was projected that average economic growth would be 5.7% per year from 2021 to 25, and then decline to 4.5% per year from 2026 to 2030.
While the United States is likely to have a strong post-pandemic upswing in 2021, growth will slow to 1.9% pa between 2022 and 2024, and then to 1.6%.
Japan will remain the third largest economy in the world in dollar terms until the early 2030s, when India overtakes it, dropping Germany from fourth to fifth.
The UK, currently the fifth largest economy by the CEBR, will drop to sixth in 2024.
The report also says that the impact of the pandemic on the global economy is likely to manifest itself in higher inflation rather than slowing growth.
“We are seeing a business cycle with higher interest rates in the mid-2020s,” analysts say, which they believe poses a challenge for governments taking large loans to fund their response to the COVID-19 crisis.
“But the main trends that have intensified by this point indicate that the world will become greener and more technological as we move into the 2030s.”
