Headlines December 27, 2020
China will overtake US as world’s largest economy in 2022, says report
China will overtake the United States to become the world’s biggest economy in 2028. This will happen five years earlier than previously estimated due to the difference in the way the two countries have recovered from the impact of the coronavirus pandemic.
These are the findings of”a study by the Centre for Economics and Business Research. “The COVID-19 pandemic and corresponding economic fallout have certainly tipped this rivalry in China’s favour”, says the report.
The CEBR said China’s “skilful management of the pandemic”, with its strict early lockdown, and hits to long-term growth in the West meant China’s relative economic performance had improved.
China looked set for average economic growth of 5.7% a year from 2021-25 before slowing to 4.5% a year from 2026-30.
Japan would remain the world’s third-biggest economy, in dollar terms.
It also said the pandemic’s impact on the global economy was likely to show up in higher inflation, not slower growth.
“We see an economic cycle with rising interest rates in the mid-2020s,” it said, posing a challenge for governments which have borrowed massively to fund their response to the COVID-19 crisis.
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