China, India set to dwarf G7 soon: OECD
Until 2020, China will have the highest growth rate among the countries studied, but it will then be surpassed by India and Indonesia as its working-age population rapidly declines.
However, China has a big start over India thanks to strong productivity growth and intensive investment in the past decade.
As a result, even though both economies will grow seven-fold in the next 50 years, China's per capita income will be 25 percent higher than current U.S. income by 2060, but India will languish at half the present American level.
Looking at it differently, China's GDP per capita is now just one-sixth that of the United States. But by 2060 it will have reached 60 percent of America's income level, putting China just behind Spain and France but ahead of Italy.
The OECD's exercise underlines the importance of demographics as a long-term driver of savings, investment and growth. China's savings rate, which now exceeds 50 percent of GDP, is expected to plunge by no less than 40 percentage points by 2060, with about half of the drop due to ageing.
Italy, Greece and Portugal are likely to eventually run current account deficits in the order of 10-15 percent of GDP.
China, by contrast, is expected to see its current account surplus widen until the late 2020s as investment falls even faster than savings due to slowing potential growth. Globally, current
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