The Real Deal by Lloyd D. Ward
Business Insights Beyond the News
Feb. 10, 2019
Vol. 1, Issue 7
If a picture is worth a thousand words, the graphic below speaks volumes as it illustrates the scale and speed of change of the world’s three largest economies in a 13-year period.
While it’s no surprise – we know the economies of China and India have been expanding steadily, and we have long expected them to catch up with the USA.
But rate at which their economies are growing is stunning. Last month, Standard Chartered released its annual study forecasting that China will overtake the USA next year in nominal GDP and by 2030, India will elbow the USA out of second place.
Standard Chartered, the London-based multinational bank, measured “nominal GDP,” which adjusts for consumer prices and lower standard of living in emerging markets.
That measure is known as purchasing power parity (PPP), and it is something we all want to pay close attention to. In the balance of this newsletter I will refer to nominal GDP as N-GDP.
One of the major drivers of this new world order is a country’s alignment of population with global share of N-GDP. Another driver is the expansion of the middle class and migration to cities in developing countries. Meanwhile, middle class numbers in the USA remain stable.
Rising N-GDP in China, India and other emerging markets offers international business leaders and investors unprecedented opportunity. My interest is focused on building bridges between these countries and the USA.
And make no mistake, the United States is not out of the game. Even though the USA is losing its Number One position in the coming decades of 2020 and 2030, its N-GDP is still on the rise, albeit significantly slower than that of China and India.
The chart above shows the rapid rate of increase. According to Standard Chartered’s forecast, the rate of N-GDP growth among the top 10 countries will increase by an average of 19.95% in the 2030s. That’s almost 12 times greater than the growth experienced by those same 10 countries in the 1990s, which was 1.68.
The average rate of N-GDP growth for each of the 10-year periods from 1990 to 2030 is worth a look:
Ave. N-GDP rate
The vast majority – 71% — of that growth will come from China, India and the USA. Let’s remember these key points as we consider investments and business development in and between Asia and the USA:
- The USA will remain a major factor in the global economy.
- China and India will lead the way as they will be central to the health of the global economy for the next two decades.
- The prospect of a two-decade long upward global PPP growth cycle will offer unprecedented investment and wealth creation opportunity for those who see, understand and participate.
In 10 days, I will host a delegation of private and institutional investors in China where we will meet an array of small- and mid-cap businessowners seeking investment to expand into the USA and elsewhere.
Two of these businesses will be showcased on the visit (see The Real Deal, Vol. 1 Issue 6, Feb.4) – Dingsen, a maker of patented pollution-free cooking charcoal; and Oak Hospital, a treatment and care center for Alzheimer’s patients using a combination of Western Science and unique Eastern Medicine and holistic techniques.
Beyond these two companies, there are many other opportunities in our Chinese business network.
Meanwhile, we are working in India and other parts of the world identifying similar opportunities for cross-border cooperation and wealth creation.
Our journey is just beginning.