The Strategist

Analysts expect China to become the world's largest economy by 2028

12/28/2020 - 03:31

China will overtake the US to become the world's biggest economy by 2028, five years earlier than expected, CEBR analysts forecasted. They also expect India to push Japan out of the top three economies in the early 2030s.

Maximiliano Hebel
Maximiliano Hebel
China will overtake the United States to become the world's biggest economy in 2028, five years earlier than it was expected, says the Centre for Economics and Business Research (CEBR) in the UK.

The coronavirus pandemic and its economic consequences allowed for tipping the scales in the fight between the United States and China in favor of the Chinese side, CEBR said. The centre points out that China is engaged in "skillful" management of the situation, including a strict lockdown. At the same time, CEBR notes, the virus has dealt a blow to long-term growth in Western economies.

China's economy will grow at an average annual rate of 5.7% in 2021-2025 and at 4.5% - in 2026-2030, CEBR forecasts. In the case of the US, the centre expects a strong recovery in growth in 2021, but also a slowdown to 1.9% annually in 2022-2024 and to 1.6% thereafter. Japan will remain the world's third-largest economy until the early 2030s, when India will take its place, while Germany will drop from fourth to fifth position, according to the forecast.

The impact of the pandemic on the global economy is likely to manifest itself in higher inflation rather than slower economic growth, CEBR notes. "We see an economic cycle in which interest rates will rise in the mid-2020s," the report says.