Japan Center for Economic ResearchJanuary, 2020

2060 Digital & Global Economy

JCER, Japan Center for Economic Research, the Japan's leading think tank, predicts theglobal economy in 2060, focusing on digital technologies that continue to evolve and have adisruptive impact on the economy and society. We illustrate the results in series.

Lead Economist,
Sumio Saruyama*
Principal Economist, Kengo Tahara

3. India rises, ASEAN and Africa become more prominent
Let's take a look at the economic map of 2060 from the long-term economic forecast ofJapan Center for Economic Research. The figure shows the share of GDP.
Composition of World GDP among Major Regions
Share of GDP in US$1990

Japan

Asian NIEsUSAEurope20192060

China

0%

10%20%30%40%50%

India

60%

70%

Others
ASEAN
80%

Source: Japan Center for Economic Research, Long-term Forecast, December 2019.
Shares in 65 countries covered in the forecast.
Singapore is treated here as Asian NIEs and excluded from ASEAN.

Africa90%
100%
Arab & ME

India becomes a major economy
This figure highlights the four structural changes that will take place by 2060. First, theUnited States and China will compete for economic hegemony in 2060 as mentioned inPart 1.
Second, the Indian economy will become a major economy. India will increase its share
fourfold during 2019-2060. By 2060, it will be third in the world, three-quarters the sizeof the United States. Its strength is to maintain population growth until 2060.
Behind the rise of China and India, a group of developed nations, including Japan, theUnited States and Europe, will drop their GDP share from a slight under 80% in 1990 to40% in 2060. Under this renewed balance of economic power, the voices of emerging*Email: saruyama-at-jcer.or.jp

72060 Digital & Global Economy
Japan Center for Economic Researchcountries will be clearly reflected in the international political and economic framework.
Third, Europe's market share will be less than half of 1990, but still slightly larger thanIndia. If European nations can stay firmly united, they will be able to maintain theirpresence as one of the poles of the world. However, Europe would lose its strength under
extreme scenarios, such as other European country’s departure from the EU and conflict
escalation between southern European countries and Germany.
Fourth, Japan will become a smaller and weaker country. Japan's share will fall to 3% in
2060 from 14% in 1990. There will no longer be any sign of having been the world's
second largest economy after the United States in the late 20th century. In order to enhance
Japan’s presence, one of the measures Japan can take would be promoting Free Trade
Agreements to maintain liberal economic order by working closely with other countries
as mentioned in the Part 2.
Indonesia and Nigeria increase its economic significanceEmerging economies likely to grow include some ASEAN and African countries.
Digitalization factors and intangible asset investment factors, which are emphasized inthis forecast, cannot be considered sufficiently for emerging countries due to statisticalconstraints. For this reason, forecasts for emerging countries are primarily based on
population (labor) factors and catch-up factors. The catch-up factor is that the greater thedifference between a country and the United States in income levels, the more room there
is for the country to adopt new technologies and increase productivity.
From this perspective, ASEAN and Africa are promising regions that will increase theirscale of the economy in the future. Both have relatively low incomes, so there is a strong
tendency to catch up with developed regions. Their population growth also tends to behigh. Indonesia, the Philippines and Vietnam in ASEAN, and Nigeria and Egypt in Africa
are countries that are likely to rise in economic scale to 2060.
In ASEAN, Indonesia jumps to seventh in the world in GDP. Thailand, currently secondin the region, is likely to have limited growth due to the expected decline in population
since the 2030s.
Africa has a particularly high population growth. In Nigeria, the population is expected
to grow from 95 million in 1990 to 480 million in 2060. Egypt will increase from 56
million to 180 million. As a result, the world ranking of GDP for Nigeria and Egypt are
expected to be 12th and 19th respectively.

8January, 2020

2060 Digital & Global Economy
Japan Center for Economic Research

The U.S. and Nordic countries likely to rank in top groups in income level.
Our forecast also includes GDP per capita, which can be interpreted as an indicator of thestandard of living and economic welfare of the people.
The countries ranked in top groups are the United States and the Nordic countries as they
are today. The United States will be third. Norway, Finland, Denmark and Sweden will
be first, fifth, sixth and seventh, respectively.
Nordic countries have the conditions to encourage growth. The figure shows the factorsthat support growth in this forecast. In addition to Japan and the United States, the averagescores of the four Nordic countries are displayed. The better the scores within thepentagon, the stronger the potential for economic growth.
Key Determinants for Economic GrowthOpen Market (2018)
70JapanNordic Countries

50Population Growth(2018-60)

USA30Open Digital (2018)10

Intangible Inv / GDP(2014)

Political Stability(2018)

Note: Scores indicate where each country stands among 35 countries with their mean 50 andstandard deviation 10. Nordic countries are Norway, Sweden, Finland and Denmark.
Source: Japan Center for Economic Research, Long-term Forecast, December, 2019.

The four Nordic countries, except Finland, will continue to grow in population until 2060,
as contrasted with many other European countries. They have open economies, stable
politics, and a growing investment in intangible assets. As factors not directly
incorporated in our forecast, they have the well-developed social security system
including vocational training and employment support, and an environment that makes it
easy to start a business. Those factors could also be encouraging in enhancing theirproductivity.

9January, 2020