Professional services firm PwC has released a report detailing its predictions of the most powerful economies in the world by 2030 and 2050.
The report, which is titled The long view: how will the global economic order change by 2050, ranked 32 countries by their projected global GDP by purchasing power parity (PPP).
PPP is the notion that, in the long run, exchange rates should move towards the rate that would equalise the prices of an identical basket of goods and services in any two countries. It is a measure used used by macroeconomists to determine the economic productivity and standards of living between countries across a certain time period.
According to the report, South Africa is ranked 29th in terms of PPP as of 2016. This ranking is expected to drop slightly by the year 2030 (to 30th position) before it rises as high as 27th by 2050.
Why South Africa is ranked so highly
According to the report, the world economy could more than double in size by 2050, far outstripping population growth, due to continued technology-driven productivity improvements.
The key reason behind this growth will be emerging markets such as China, India, Indonesia and South Africa, which are expected to grow twice as fast as advanced economies on average.
According to PwC, South Africa, alongside Nigeria, is one of the few countries expected to see a marked acceleration of annual average growth over the next few decades.
However, the report warns that to support this long-term sustainable growth, the countries need to develop a broader-based economy, diversifying its exports to ensure its growth is not dampened by global price or demand shocks.
In addition they should look at developing its institutions and infrastructure, supporting long-term productivity growth.
To capitalise on this growth, South Africa will also have to move away from the “curse” of natural resources which has been be captured by a narrow elite at the top of developing economies and not distributed widely across the population.