US to fall behind China, India in economic ranking

A new report says China has already surpassed the US as the most powerful economy in the world but India will also overtake the US by 2050.

In the report entitled "The long view: How will the global economic order change by 2050?", the professional services giant PWC ranked 32 countries by their projected global GDP, measured by purchasing power parity (PPP).

PPP is used by macro-economists to determine the economic productivity and standards of living between countries.

As of 2016, India has been in third place in PwC's table with a PPP of $8,721bn, but by 2050 it is projected to grow to a huge $44,128bn.

"By 2050, the E7 economies could have increased their share of world GDP from around 35% to almost 50%. China could be the largest economy in the world, accounting for around 20% of world GDP in 2050," the report noted.

PwC also predicted that Indonesia is going to move up the rankings and overtake Europe's powerhouse economy Germany and even Russia by 2050.

According to the report, the world economy will double in size by 2042, growing at an average annual rate of just over 2.5% between 2016 and 2050.

"Growth is expected to be driven largely by emerging market and developing countries, with the E7 economies of Brazil, China, India, Indonesia, Mexico, Russia and Turkey growing at an annual average rate of 3.5% over the next 34 years, compared to an average of just 1.6% for the advanced G7 nations of the US, Canada, France, Germany, Italy, the UK and Japan," the report said.

To realize this growth potential, the report said, emerging market governments need to implement structural reforms to improve macroeconomic stability, diversify their economies away from undue reliance on natural resources (where this is currently the case), and develop more effective political and legal institutions.