A global realignment by 2020: U.S. decline, emerging economies rise

Following the projection up until 2015 which predicted a falling dollar and a US recession in an earlier paper, this current document builds on that and projects outcomes for 2020 and assumes a sizable yearly U.S. fiscal stimulus for 2008-2011.

This paper finds that U.S. income per capita would begin falling after 2013, as the impact of the assumed four-year fiscal stimulus wore off. During the whole period 2008-2020, the projected growth of U.S. income per capita is only 0.5 per cent per annum, well below that of most other developed economies.

Other key findings include:

• given the growth trends of all developed and developing countries, the paper projects that by 2020 there would be a major realignment of the global economy, with the United States sinking significantly in importance and other emerging economies assuming greater prominence
  
• in 2008, the size of China’s economy (measured in purchasing power parity terms) was about 86 per cent of the U.S. economy - 2020, the corresponding percentage would be about 132 per cent
  
• India’s economy would enlarge from about 35 per cent of the U.S. economy in 2008 to about 55 per cent in 2020, and surpass the size of Japan’s economy by about 45 per cent - from a much smaller starting point, Brazil would also acquire significantly more economic weight
  
• these results suggest that there would likely be seismic economic and political changes by 2020 - these dynamics would be even more dramatic if the economic policies of China, India and Brazil were adjusted in order to enhance their long-term development prospects.