The FINANCIAL — Mumbai, June 6, 2011: The combined domestic banking assets of the ‘E7’ emerging economies of China, India, Brazil, Russia, Mexico, Indonesia and Turkey will exceed those in the ‘G7’ countries sooner than predicted before the financial crisis, according to PwC’s ‘Banking in 2050’ report published today.
The G7 comprises the US, Japan, Germany, the UK, France, Italy and Canada.
India’s rate of growth by contrast is expected to overtake that of China’s in the long run as it has more catch-up potential and its working age population growth will be much stronger in the long-term. India’s share of global GDP in $ terms could therefore increase from only 2% in 2009 to around 13% in 2050 after allowing also for potential real exchange rate increases. This makes it one of the most rapidly growing economies over this time period. However, to sustain these high growth rates India must continue to pursue growth-friendly policies (e.g. invest in infrastructure, open up its markets to increased competition, reduce budget deficits, increase rural education levels particularly for women and reduce bureaucracy).
On the future expectations of the Banking industry, Harsh Bisht , leader – Banking and Capital markets, PwC India said:
“China and India could have a combined share of around 35% of global banking assets by 2050. The US, Japan and Western Europe are all projected to see large falls in their share of global banking assets in the coming decades.”
Commenting on the shift of global banking power to the emerging economies, John Hawksworth, chief economist, PwC, said:
“A fundamental shift in the geography of the world economies will take place during the working lifetime of those at the start of their career with huge implications for job creation, language learning and financial systems. The GDP of the E7 countries is currently well behind that of their G7 counterparts but we’ll see them at level pegging within the next two decades and well ahead within the next four. In the banking world, this shift is happening even faster than anticipated and appears to have been accelerated by the financial crisis as emerging market banks have been relatively shielded from the effects of declining asset values. We could now be talking about global banking assets quadrupling to around $300 trillion by 2050 with banks around the world fighting for a share. ”