According to a report published by the World Bank on Thursday from last week, in approximately 17 years the developing countries will capture most of the savings and investments world-wide.
To demonstrate this alleged trend, the World Bank group sketched two possible scenarios. In one of them, the difference on the investment levels between the developing countries and the developed countries gradually fades out as time passes, while in the other scenario, it all happens significantly faster. Therefore and in the less optimistic alternative, in 2030, the income per capita in developing countries will be equivalent to 16% of the developed countries. In the most optimistic conjecture, this value is stated as being around to 19%.
In terms of global growth, the World Bank believes that the growth rate will be somewhere between the 2.6% and 3%, with the developing countries growing between 4.8% and 5%, that will lead to a contribution of 87% to 93% for the overall world growth. With this possible reality in mind, alongside with the perspective of the financial markets maturation process to proceed with its normal path, there’s no reason to believe that the investment and savings won’t grow above the average in these countries.
As we know, the aging of the population will lead to even lower levels of savings across the World. However, this phenomenon will happen at a slower pace in developing countries such as Brazil and Mexico. The Sub-Saharan Africa will be the only region on which the savings level will remain virtually unchanged.
If we look at this but shift the focus to the absolute values we have at our disposal, we notice that the Middle East and Asia will continue gathering the big savings amounts. China will be the country having the highest level of savings in 2013 with roughly 7 billion euros, and everyone expects them to surpass the United States and Japan around 2020. As for the the developed countries, they will witness their own share of world savings dropping, as their contribution will go from 12% to 9.1%.
As a direct consequence of this, China will become responsible for nearly 30% of the world investment, while Brazil, India and Russia combined will represent roughly 13%. The developing countries will invest essentially in the services industry and its infrastructures, mainly because their average income per capita will record a noticeable rise. Between 2010 and 2030, the investment on services will grow from 57% to 61%.
The current vice-president of the World Bank group, Kaushik Baku, has recently spoken about this issue: “We know by looking at past experiences in South Korea, Indonesia, Brazil, Turkey and South Africa, that the investment levels are the key foundation for any kind of growth in the long run. In less than one generation, the global investment will be at the mercy of developing countries. And within those developing countries, China and India will be the biggest investors, as both will be responsible for roughly 38% of the investment in 2030. All this has the potential to dramatically change the financial landscape of the global economy that lies ahead of us.”
With the end of the American and European hegemony, we will witness to a considerable increase of monetary “clusters” or headquarters across the World. As a consequence from this, the global economy and the developing countries will be the less affected by the monetary policies undertaken by the US and by the powerful European countries.