World’s Largest Economy to Be China
China will overtake US real economic output by 2016 according to a recent International Monetary Fund (IMF) forecast.
The IMF estimated that by 2016, China will be producing more in two weeks than it did in a year during 1980 when it began its economic reforms.
Back in 1980, the US produced more than 10 times as many goods and services as China did.
But since then, China’s share of global output doubled while that of US dwindled rapidly.
In 1980, China only produced 2.2 percent of the world economic output. This jumped to 7 percent by 2000, to 14 percent today and soon to 18 percent on 2016.
On the other hand, in 1986, the US produced 25 percent of the global economic output. This declined to 20 percent and soon to a projected 17.8 percent in 2016.
Based on the projections, from the year the economic reforms started in China in 1980 to the year China is expected to outdo the US in 2016, China’s output will rise to 30 times while the US’ output will rise to only 2.7 times.
Despite being overtaken as the world’s largest economy, the US will remain as the world’s biggest market.
If China’s currency remains undervalued like it is right now, in nominal terms, the US economy in 2016 will be two-thirds larger than China’s.
But if relative prices are considered, China will still be the largest economy.
If the IMF projections will actually occur, it will be the first time in the modern era that the US is undertaken by another country in terms of real economic output.
In the next decade, the IMF predicts that China will grow by 9.5 percent a year while US will grow by 2.75.