Goldman Sachs: Pakistan projected to be among largest economies in the world in 2075

Dawn via Asia News Network

13:30 JST, December 22, 2022

A research paper published by Goldman Sachs recently projected Pakistan to be the sixth-largest economy in the world in 2075 given “appropriate policies and institutions” are in place.

Authored by economists Kevin Daly and Tadas Gedminas and titled “The Path to 2075,” the paper projected that the five largest economies in 2075 will be China, India, the U.S., Indonesia and Nigeria.

Goldman Sachs has been projecting the long-term growth of countries for almost two decades now, initially starting out with BRICs economies but later expanding to cover 70 emerging and developed economies.

Their latest paper covers 104 countries with projections going as far as 2075.

Pakistan’s future star status is predicted on the back of its population growth, which along with Egypt and Nigeria could place it among the largest economies in the world in the next 50 years, according to Goldman Sachs.

By that time, the research projects Pakistan’s real GDP to have grown to $12.7 trillion and its GDP per capita to have hit $27,100.

These numbers, however, are projected to be less than a third of the size of China, India and the U.S. India’s real GDP in 2075 is projected at $52.5 trillion and per capita GDP at $31,300.

Among key risks to their projections, the economists particularly highlight “environmental catastrophe” and “populist nationalism.”

Unless a path to sustainable growth is ensured through a globally coordinated response, climate change could heavily skew these projections, particularly for countries like Pakistan, with geographies that are especially vulnerable.

With populist nationalists coming to power in many countries, the report says they might lead to increased protectionism that could potentially result in the reversal of globalization, thereby increasing income inequality across countries.

Global growth on a declining path

The paper notes that global growth has slowed from an average of 3.6% per year in the past 10 years to 3.2%, and the slowdown has been relatively broad-based.

They project global growth will average 2.8% between 2024 and 2029 and will be on a gradually declining path.

While global growth is dipping, emerging economies are growing faster than developed markets and will continue to converge with them.

The report expects that the weight of global GDP will shift more toward Asia over the next 30 years and the world’s largest economies will be China, the U.S., India, Indonesia and Germany in 2050.

The decline in global growth will be driven by the decline in population growth, which U.N. projections imply will fall to close to zero by 2075. The paper says this is a “good problem to have” as it mitigates damage to the environment but could pose economic problems arising from high healthcare costs and an ageing population.

The U.S. won’t be able to repeat its strong performance from the last decade, with potential growth remaining “significantly lower” than that of large developing economies.

The U.S. dollar is also projected to lose strength in the next 10 years.

Emerging markets’ convergence has led to falling income inequality between economies but income inequality within most economies has risen. This poses a major challenge to the future of globalization.