Economy
Emerging economies set to reshape world landscape: WB
(Xinhua)
Updated: 2011-05-18 17:01
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WASHINGTON -- The emerging economies are redefining the global economic and geopolitical patterns in coming years with a robust economic growth outpacing developed economies, which highlights the importance of a more flexible and inclusive global system to accommodate this fundamental trend, renowned economists from the World Bank (WB) said on Tuesday.
New growth poles
The world's emerging economies as a group will grow 4.7 percent annually between 2011 and 2025 on average. This growth rate is twice as quick as a 2.3 percent to be registered by advanced economies over the same period, the World Bank projected in a latest report.
The fast rise of emerging economies has driven a shift whereby the centers of economic growth are distributed across developed and developing economies, a truly multi-polar world, said Justin Yifu Lin, the World Bank's chief economist.
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By 2025, six major emerging economies -- China, Brazil, India, Indonesia, the Republic of Korea (ROK) and Russia -- will account for more than half of all global growth, and the international monetary system will likely no longer be dominated by a single currency, according to the report, which has taken about two years to complete.
This report highlights the diversity of emerging economies' growth momentum -- some of them have relied heavily on exports, such as China and the ROK, and others have put weight on domestic consumption, such as Brazil and Mexico.
With the emergence of a substantial middle class in developing countries and demographic transitions underway in several major East Asian economies, stronger consumption trends are likely to prevail, which in turn can provide a boost to sustained global growth, it adds.
"This new report serves as a vehicle for stimulating new thinking and research on anticipated structural changes in the global economic landscape," Lin said.
Flexible international system
The trend toward a multi-polar economic pattern is a "gradual process," and it is unlikely for countries like the United States to lose the economic dominance in coming years, said Hans Timmer, the World Bank's director of development prospects.
However, focus should be on fostering new initiatives and platforms flexible enough for developing countries to better voice their stance in coming years, said Timmer.
"Emerging market multinationals are becoming a force in reshaping global industry, with rapidly expanding South-South investment and FDI inflows. International financial institutions need to adapt fast to keep up," noted Lin, also senior vice president for development economics of the Washington-based agency.
In response to questions from Xinhua, Lin stressed the importance of a multi-currency regime, as a new global economic order is unfolding.
"Over the next decade or so, China's size and the rapid globalization of its corporations and banks will likely mean a more important role for the renminbi (the Chinese currency)," said Mansoor Dailami, lead author of the report and manager of emerging trends at the World Bank.
"The most likely global currency scenario in 2025 will be a multi-currency one centered around the dollar, the euro and the renminbi," Dailami added.
The report forecast that China's economy could potentially overtake the United States in nominal terms by 2020 if a limited, gradual revaluation of the renminbi were to occur, or that would happen in 2024 if the exchange rate remains stable at 2009 level.
The Bank held that the trend to multi-polarity will be by and large positive for developing countries, but the transition also needs to be managed.
Lin cautioned that throughout the course of history, major economic transitions like this one always present challenges, as " they involve uncertainties surrounding identification of emerging global issues of systemic importance and development of appropriate policy and institutional responses."
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