IMF Sees Growth Shift Toward BRICS and Away From G-7 in New Outlook
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IMF Sees Growth Shift Toward BRICS and Away From G-7 in New Outlook
Alex Tanzi
Wed, October 23, 2024 at 9:59 PM GMT+3 2 min read
(Bloomberg) -- The world economy is set to rely even more heavily on the BRICS group of emerging economies to drive expansion, rather than their wealthier Western peers, according to the International Monetary Fund’s latest forecasts.
Compared with its last round of predictions six months ago, the IMF now expects a bigger share of growth over the next five years to come from powerhouse BRICS economies like China, India, Russia and Brazil, according to forecasts published this week based on purchasing power parity. By contrast, the expected contribution of Group of Seven members like the US, Germany and Japan was revised down.
China will be the top contributor to global growth over the next five years, with its 22% share bigger than all G-7 countries combined, according to Bloomberg calculations using the new IMF forecasts. India is the other global growth juggernaut, expected to add almost 15% of the total through 2029.
Some of the forecasts for other countries also illustrate how the world economy is becoming more reliant on emerging markets, especially based on the purchasing-power measure that seeks to adjust for prices and tends to give greater weight to poorer but more populous countries over richer ones.
On that basis, Egypt is expected to add 1.7 percentage points to global growth in the period, the same as Germany and Japan. Vietnam is expected to contribute 1.4 percentage points, equal to France and the UK.
The strong expansion of the US economy over the past 25 years, and especially in the post-pandemic period, makes it by far the biggest contributor to world growth among developed nations. Even so, it hasn’t been able to maintain its share of the world economy in PPP terms, compared with the trajectory of the most populous countries India and China.
The two smallest G-7 economies, Canada and Italy, are expected to contribute less than 1% each to world GDP growth over the five-year period — a lower amount than much poorer countries with larger populations such as Bangladesh, Egypt or the Philippines.
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