The global economy is currently in a "super-cycle" that will
produce average world growth of 3.5 per cent for the 2000-2030 period; well
above the 3.0 per cent rate in the prior 20 years, helped by an expected pick-up in
global expansion. This is in comparison to the
periods 1870-1913 and 1946-73, which also saw unusually rapid world economic
development, Standard Chartered said in a new report on emerging markets.

Consequently, the firm expects China to lead the way on reform,
enabling its economy to deliver an average 7 per cent growth between 2013 and
2020. With the planned rebalancing of the structure of its economy already
underway, more sustained growth of 5.3 per cent is likely for 2021 to 2030.

“As economies across Asia, Africa and Latin America
transform themselves on the back of a growing population, an expanding middle
class and rapid urbanisation, the share of emerging market economies could rise
to 63 per cent of world GDP by 2030, from 38 per cent today; the increasing
size of these faster-growing countries is a key driver of the super-cycle,” the
firm said in the report.

As a result, world trade could quadruple in value to $75 trillion
over this period, supported by new regional and bilateral trade agreements and
the effects of globalisation and the internet.

Scepticism has risen in recent years as a result of the slowdown
in several major emerging economies, such as China
and India, along with the
severity of the euro-crisis, however, Standard Chartered suggests that a modest
set of reforms could trigger a growth revival in several large emerging
economies, including China, India, Indonesia,
Nigeria and Brazil.

“Recent pessimism about emerging markets is overdone.
Concerns over the middle-income trap, excessive Asian leverage, ‘broken’ growth
models and rising US
interest rates appear exaggerated. While we have lowered our long-term
forecasts for China, India and Europe,
the case for an emerging markets-led super-cycle still holds. Successful
reforms will be critical for these economies to realise their catch-up
potential,” said John Calverley, global head of macroeconomic research.

The report also stated that the growing scale of emerging
economies is key to world growth seeing as such economies with growth rates
exceeding 4 per cent, now account for 37 per cent of the world GDP, up from 20
per cent in 1980. In this respect, Asia (excluding Japan) is likely to account for
two-fifths of global GDP by 2030.

As such, the report argues that 70 per cent of global
economic growth between now and 2030 will come from emerging economies, with China set to become the world’s largest economy
in 2022, surpassing the US
economy. However, China’s
per-capita income will still be less than one-third of the US, implying
significant scope for further growth.

Meanwhile, many developed economies are still recovering from
the 2008-09 financial crisis, with the US economy gaining the strongest momentum
in the developed world. As such, the world’s largest economy is estimated to
grow at an average 2.8 per cent from 2013 to 2020 and 2.5 per cent in the
following decade, the report said.