Saudi Arabia, Egypt and Iraq will be among the world's 30 largest economies by 2028, according to forecasts by a London-based economic consultancy.
The Centre for Economics and Business Research (CEBR) believes that China will finally eclipse the US in 2028, as the Asian giant's GDP rises to USD 33 trillion, compared to the United States' GDP of USD 32 trillion.
The global economy is set for unprecedented changes over the next two decades, which could see established developed economies lose out to emerging nations not just from Asia, but elsewhere as well.
CEBR notes that the forecast is focused on three elements such as real GDP growth, an inflation forecast and a currency forecast.
While the first two are likely to be accurate on an annual basis to within 1% or in some cases 2%, currencies have a way of wildly defying forecasters' predictions.
"The majority of the mega-trends incorporated in these forecasts are well established and, while the precise years in which changes of position are likely to take place can move backwards and forwards by as much as five to 10 years, the directions of change are well established," the consultancy said.
MIDDLE EAST COUNTRIES RISE
Saudi Arabia will predictably remain the Middle East's largest economy, its GDP nearly doubling from USD 718 billion in 2013 to USD 1.3 trillion by 2028, as its billion-dollar investments in the non-oil sector bear fruit.
The consultancy expects Saudi to become the 18th largest economy by 2018 and 2023 on oil-driven growth, but ease back to its current 19th position by 2028.
Egyptians might take heart from the prediction that by 2028, the country would emerge as the 22nd largest economy in the world. The country is currently stuck in a political vortex that it can't seem to get out of, but hopefully the authorities can resolve some of the key issues that are holding back the country.
Egypt's open economy, favorable demographics and strategic location within the key markets of Europe, Middle East and Africa should help the country push through difficult social and political reforms.
Another major surprise could be Iraq as CEBR looks past the massive political and sectarian challenges facing the country. Iraq is an oil powerhouse and has barely scratched the surface of its oil reserves.
While the country has ambitious plans to raise crude production to anywhere between 7-10 million bpd, most analysts believe Iraq will be far short given its infrastructure issues.
Of course, much will depend on the Iraqi government's ability to bring some sort of normalcy and security to attract the needed investment.
IRAN, UAE FAIL TO MAKE LIST
As Egypt and Iraq rise up the rankings, the Middle East will also see two countries disappear from the list of the world's 30 largest economies - Iran and the UAE.
Iran has already slipped from 21st place in 2012 to 30th place as Western sanctions take their toll, and the country is unlikely to retain its place as other economies gallop ahead.
More interestingly, the UAE may not be able to maintain its position as one of the world's largest economies, despite a World-Expo-induced shot in the arm.
"The UAE rose from 30th position in 2012 to 29th in 2013 on the back of rising oil production and an economic recovery in the property sector," CEBR said. "But post 2018, the country is likely to fall back to 37th position in 2023 and 39th in 2028 as the consequences of weaker energy prices, lack of skills and education and failure to diversify start to emerge."
While some disagree with the CEBR report, the study follows the same growth trajectory as an HSBC 2050 survey that predicted that Egypt would overtake Saudi economy by 2050.
According to HSBC estimates, by 2050 Egypt's economy will emerge as the 19th largest in the world, to reach USD 1.16 trillion, surpassing Saudi Arabia's USD 1.13 trillion. Iran will be the only other Middle East state in the world's 30 largest economies, with USD 732 billion.
The HSBC report contrasts with a similar report by Citibank, which estimates that the Saudi economy will grow to be the sixth largest by 2050 (read here: Saudi Arabia 6th Richest Economy By 2050).
Citibank expected Egypt to be among the leading economies in the world, though not above Saudi Arabia.
EMERGING ECONOMIES RISE
The global economy will also see other upsets as emerging countries move ahead of established countries such as the Netherlands and Spain.
Countries like Philippines, Thailand and Nigeria will rise while countries such as France, Italy and Switzerland are set to slip in rankings.
India is expected to take the biggest leap to become the 3rd largest economy by 2028, compared to its 11th position currently.
Others like Mexico, Poland, Turkey and Taiwan will move up, as the top 30 economies list undergoes remarkable changes over the next few years.
© alifarabia.com 2014
