Poland will reach the highest average growth rate among all big EU economies until 2050. The real average annual GDP growth in Poland by that time will likely reach some 2.7% or 2.9% per capita, shows a report by PwC, one of the biggest global consultancies.
The report “The World in 2050: Will the shift in global economic power continue?” contains long-term forecasts for potential GDP growth until 2050 for 32 biggest global economies which together account for 84% of global GDP.
According to the forecasts, Poland will achieve the highest average growth rate among all big EU economies and will also overtake Russia in terms of long-term growth rate.
“Based on the latest forecasts, the real average growth of Polish GDP by 2050 will reach about 2.7% a year and 2.9% per capita. In 2014-2010, Poland will develop at the annual pace of 3.4%, in 2021-2040 it will be 2.8% a year and some 2.0% a year in 2041-2050,” the report reads.
Poland's economic position affected by shrinking population
The forecast decline in annual growth rates overtime results not only from the fact that the Polish society is aging, but also from the fact that once Poland catches up with advanced economies, further dynamic growth of its economy will be a bigger challenge, the authors say. Thus, the decline in population will have a clear negative impact on Poland's economic position on the global map in the first half of this century.
The 2.7% forecast for the real annual growth rate of the Polish economy in 2014-2050 still looks well against the background of Germany (1.6%) and Russia (2.1%), according to experts.
“Relatively attractive labor costs and the increase in the quality of human capital as well as the relative stability both in the area of politics and economy are Poland's clear assets,” PwC senior economist Mateusz Walewski comments.
Further restructuring of the economy, from labor-intensive production with low use of technology towards production with medium use of technology and assembly of technologically advanced products should be sufficient to ensure a relatively dynamic growth pace in the horizon of 5-7 years, he believes.
Innovation and R&D – key to dynamic development
But in order to ensure a good development pace in a more distant perspective, Polish enterprises from technology-intensive sectors must move higher in the chain of creating products value. And the only way to achieve this goal are higher investment outlays for R&D and innovation.
Local savings should be a source of financing for these investments. “If we do not want to allow for deceleration of the Polish economy in the longer term, this economy must be able to nurture own players on the global arena, whose R&D, innovation, investment decision-making and financial centers will be based in Poland,” Walewski believes.
The most urgent challenges faced by the Polish economy are the political crisis in Ukraine and the euro-zone's persisting economic problems, according to the forecast.
Still, these factors are short- and mid-term, and should have no serious consequences for the long-term growth potential of the Polish economic growth, PwC analysts say.
But they also note that the general lack of economic stability in the region is negatively reflected in the Polish zloty’s FX rate as well as in global companies and funds’ decreasing willingness to invest in CEE.
The European economies will suffer a gradual decline in their positions in rankings, the forecasts further show. By 2050, the average growth rates of the key euro-zone economies are predicted to reach as mere 1.5-2.0% a year. Meanwhile, Indonesia, Brazil or Mexico have the potential to overtake the British and French economy by size by 2030. By 2050, Indonesia could even climb to the #4 position in the global rankings if it sticks to its growth-focused policy.
China will be the biggest economy by 2030, but in the longer perspective Chinese growth rate will return to the average global level, according to the report. By 2050, India may compete with the US for the second place in the global GDP rankings.
The global economy will develop at the pace of just over 3% a year in 2014-2050, to double by 2037 and nearly triple by 2050 versus 2014 level, the report indicates. Around 2020, however, the global growth rate is expected to slow down as expansion of China and other key emerging economies decelerates, as well as due to a lower growth rate of working-age population in many big economies.
According to the forecasts, Japan will post the lowest growth rate of all 32 countries included in the study, a development related to Japan's shrinking population. As a result, by 2050 Japan will likely fall to the 7th spot in the global GDP rankings from the current 4th position.
Source: Ministry of Treasury