A just-published report updated our long-term research on the shifting balance of power away from the U.S. and developed market (DM) economies towards China and the EM world.
Using published GDP statistics, the EM world will overtake the DM economies in terms of size by the mid-2030s. However, if one adjusts for the overvaluation of DM currencies (especially the U.S. dollar) and the undervaluation of EM currencies, then the inflection point has already occurred. Moreover, on this basis, the number two economy – China would move to number 1 ahead of the U.S.
Regardless of how one calculates economic importance, the dominance of the U.S. and other advanced economies over China and the emerging world has progressively eroded in recent decades and will continue for the foreseeable future based on current trends. China has solidified itself as a competing economic superpower to the U.S. that will not be dislodged with a trade war.
The next phase of Global LeaderShift will be a rebalancing in political power, which is now underway. Financial wealth has significantly lagged these trends, but also should follow in the decade ahead.
