Megatrends to 2050 is a forecast, Global Country Risks, dated 20 June 2023 by BMI, a FitchSolutions Company.
The following are some salient excerpts -
(a) The world order will become increasingly multipolar over the coming three decades, as geopolitical influence disperses away from the US and emerging economies seek to increase their power in tandem with their economic and demographic weigh.
(b) Our GDP forecasts for 2050 envisage China and the US being by far the biggest economies with nominal GDPs of USD52.5trn and USD42.9trn respectively, far ahead of third-ranked India (USD16.3trn).
(c) Despite a probable shift towards geopolitical ‘bifurcation’ in the northern hemisphere, we see scope for an additional bloc or loose grouping centred around the ‘Global South’, with India, Indonesia, South Africa, Nigeria and Brazil becoming increasingly prominent on the world stage.
(d) A substantial increase in great power tensions would accelerate the fragmentation of the international system, as each great power would seek to build their own, largely exclusive, sphere of influence and economic linkages between rival powers would rapidly be unwound.
(e) Geopolitical considerations will increasingly supersede economic ones for governments and businesses in the post-Covid, post-Ukraine war international system.
(f) As the world becomes more multipolar, and as more economies acquire greater influence, the risk of major power conflict will increase.
(g) We believe that any hypothetical conflict between the US and China could be a defining moment for the international system. At the same time, we emphasise that great power conflict is by no means inevitable
(h) Against this backdrop, we also anticipate that more markets will acquire nuclear weapons, or at least the ability to develop them at short notice.
(i) The world order will also become more fluid over the coming decade or two, as a certain degree of ‘tactical’ shifting may take place by medium-sized markets seeking to maximise their ‘independence’
(j) For the foreseeable future, more markets will be at risk of becoming subsumed in ‘proxy’ conflicts between the major powers.
(k) We anticipate that multiple markets around the world, especially larger ones, will experience greater decentralisation pressures over the coming decades. In some cases, decentralisation will be a precursor to formal separatism, especially where separate cultural identities are the main drivers of autonomism.
(l) The EU is also analogous to some of these markets, and we anticipate continued tensions there between those that favour greater centralisation under Brussels and those that favour greater devolution of power back to nation states. These dynamics could be tested again if the continent experiences a similar crisis to that in the eurozone in 2010-2012.
(m) We believe that Russia is one of the most likely to experience greater autonomist or separatist pressures, as a long-term consequence of the war in Ukraine. Anecdotal reports suggest that Russia’s ethnic minorities have experienced disproportionately high casualties in the war, which may increase their sense of resentment towards Moscow. We also anticipate that Russia will emerge from the conflict substantially weaker militarily and economically poorer. This suggests that Moscow will have reduced ability to subsidise or militarily suppress potentially rebellious regions.
(n) We anticipate that urbanisation will continue in Emerging Markets, with the UN forecasting that the world’s urban population will rise from 55% of the global total in 2018 to 68% by 2050, with the bulk of this increase taking place in Asia and Sub-Saharan Africa. With more people living in cities, social unrest and conflicts could lead to urban warfare. However, urbanisation is not necessarily irreversible.
(o) Despite the fact that globalisation has reached a plateau, we believe that inter-connectedness between cities spanning different markets and continents will be a key factor upholding some form of globalism.
(p) Some "known unkowns" -
- Considerable question marks surround Russia’s ability to remain a major world power.
- It is unclear if the Communist Party of China (CPC) can continue to hold a monopoly of power in Mainland China all the way out to 2050.
- The EU could itself face centrifugal tendencies as a result of rising nationalism, which could be exacerbated by another financial crisis.
- The US has become increasingly polarised, raising the possibility that it, too, could face internal upheaval that could force it to turn even more inward.
The above are by no means iconoclastic, mostly following current happenings. However, these predictions are dated June 2023, before the tide turned over the Ukraine War and the new Israel-Hamas crisis.
With the US and EU running short on financial, ammuntion, and political support for Ukraine, Russia remains resilient and may finally settle for a Ukraine deal in its favour, particularly in the event of Trump's return to the White House. This would tilt the global geopolitical balance against the Western camp.
At the same time, across the Middle East, the wider Global South, and various Western countries, the Gaza war is increasingly challenging the legitimacy of Israel's disproportionate reprisals and America's continuing support, regardless of Houhti's attack on selected civilian shipping in the Red Sea. In the circumstances, China and Russia are likely to benefit geopolitically as a result. How the Israel-Hamas War Is Tilting the Global Power Balance in Favor of Russia, China.
The predictions do not seem to take sufficient account of China's deeply-imbedded centrality in the global supply and value chain, US-led de-coupling or de-risking notwithstanding. By 2018, China has become a bigger trading partner for 128 of 190 countries than the US, according to the Lowy Institute. Seven of the world's top ten busiest container ports are in China (including Hong Kong). China is also the world’s largest manufacturer. Most of the world's consumer products, whether marked "Made in China" have incorporated China's inputs in terms of minerals and other materials, technical components, assembly or logistics.This centrality is likley to gain further momentum with the world's largest trading bloc, the Regional Comprehensive Economic Partnerswhip (RCEP) comprising ASEAN and its main trading partners including China, accounting for a third of global GDP and a third of the world's population. Additionally, China's ubiquitous Belt and Road Initiative, linking the world with overland and maritime infrastructure, has now been rejigged to become more indebtedness-and-ecology sensitive, as well as more open and inclusive of local stakeholders.
Neither have the predictions taken enough account of China's lead in 37 out of 44 cutting-edge technologies, according to ASPI's March 2023 Critical Techoilogy Tracker). These include certain sectors in Artificial Intelligence, quantum computing and Internet of Things (IoT) which are defining how people live, how businesses are conducted, and how national powers are measured in the 21st century. This lead is likely to endure, thanks to China's vast technological manpower pool. By 2025 Chinese universities will be producing more than 77,000 STEM PhDs per year compared to approximately 40,000 in the United States. Excluding international students, Chinese STEM PhD graduates would outnumber their U.S. counterparts more than three-to-one, according to George Town University's CSET (Center for Security and Emerging Technology).
China's current gloal gravitas is reflected in an analysis Which country has the most influence in the world? dated 29 January 2024 by the Red Team Analysis Society, a global geopolitical consultancy and think tank.
Last but not least, the predictions show insufficient recognition that the Chinese Communist Party (CCP) has been evolving and become very adaptive in recent decades. Under its tutelage, the lives of 1.4 billion Chinese people have been dramatically transformed. Globally, it has become one of the governments most trusted and supported by its people, muliple ranks above many Western democracies including the United States, according to recent research conducted by the Harvard Kennedy School, 2023 Edelman Trust Barometer, and IPSOS Global Happiness 2023 Report. Current demographic, economic, and geopolitical headwinds notwithstanding, it is still too soon to conclude that China will never overtake the United States as the largest economy.
