Interesting piece from Standard Chartered:
The third super-cycle started – in our view – in 2000. The period between the second and third super-cycles, from the early 1970s to 2000, was characterised by ongoing economic challenges in the West, a slowdown in Japan, the collapse of the Soviet Union, debt and currency crises in Latin America, and the relatively small size of China and India, both of which were in the early stages of opening up. There was no dynamic driver for the world economy. In 2000 the world economy was $32 trillion in size. Now, following the global recession and financial crisis, the world economy is almost twice the size of a decade ago. There was a significant contraction as a result of the crisis and global recession, but now the world is back to its pre-recession peak. Next year, based on conservative growth assumptions, this could rise to $64.7 trillion. Global trade has also recovered to pre-recession levels.By 2030 – the time period for this analysis – we believe that the world economy, on the projections laid out here, would rise to $308 trillion, which would equate to $129 trillion in today’s prices and dollars, and would be $143 trillion, keeping prices constant but allowing for some emerging-market currency appreciation (see chart above).
Now we could of course dismiss this a piece of bankerly tosh. But it might be unwise to do so.
For we do have an entirely non bankerly estimate which makes much the same point. Here.
The global economy expands at an average annual rate of about 3% to 2100, reaching around US$550 trillion (all dollar amounts herein are expressed in 1990 dollars, unless stated otherwise). This is approximately the same as average global growth since 1850, although the conditions that lead to this global growth in productivity and per capita incomes in the scenario are unparalleled in history. Global average income per capita reaches about US$21,000 by 2050.
3% growth on that $64.7 trillion, with compounding, is $116.8 trillion by 2030. We’re in the same sort of ballpark then. And that second estimate? One of the economic projections upon which the entire edifice of climate change is based. Yes, this is one of the numbers which gets plugged into the IPCC models.
Further, it’s the estimate which comes closest to the best estimation method we have of the future. Tomorrow is going to be much like today, next week much like last week, next year much like last.
Sure, there will be minor variations, 1% this way or that: days do get longer going into the spring, shorter in the autumn, but our best bet is that daylight tomorrow will be much like today. If it’s -20 oC here, today, then our best estimate of temperatures tomorrow is going to be -30- -10 oC: we’re not about to say that the system will jump to plus 20 oC. If global economic growth has been 3% in real terms for a century and a half our best estimate of future global economic growth is going to be about 3%.
Unless we want to call in some extraordinary evidence to show that it won’t be of course. Or follow some blindingly stupid policy (and there are so many to choose from!) which kills economic growth stone dead. But even then, the stupidities which we perpetrate in the UK won’t have all that much effect on the global economy.
But reject this as bankerly tosh if you wish: in doing so, you’ve also got to reject one of the building blocks of the whole climate change thang. And as you know, I don’t reject the underlying science and assumptions of climate change and thus do not regard as bankerly tosh something which agrees with it.