Goldman Sachs: In 2075, Indonesia will become the world’s largest economic country, overtaking Japan
Goldman Sachs, a multinational investment bank and financial services company headquartered in New York, has been known for the last two decades to provide long-term growth forecasts for countries in the world.
Now the Goldman Sachs economists led by Jan Hatzius have expanded their projections to 104 countries in the world half a century from now. They projected several points about the world economy in 2075.
One of the points is quite surprising, especially for Indonesia. Here are some of their projections:
- Global economic growth is predicted to average below 3% per year, down from the projected 3.6% in the decade before the financial crisis. This number will decrease gradually, reflecting the slowdown in labor force growth.
- Developing countries will meet and join developed countries or industrialized countries such as China, the United States, India, Indonesia and Germany which will be at the top of the label of the largest economy. Nigeria, Pakistan and Egypt could also be the biggest.
- The strength of the United States is predicted to decrease over the next 10 years, although in the last decade its economic performance is still dominating and relatively strong. Dollar resistance is predicted to decrease.
- Income inequality between countries will decrease, which means that several countries will show their progress.
Specifically for the first point, regarding the global economic slowdown, Goldman Sachs economists explained that one of the reasons was a matter of demography. “Global population growth has halved over the last 50 years,” the economists said in their special note as cited by Bloomberg.
One example of the challenge is how will countries pay for the increasing healthcare costs of their aging and aging population?
Then pay attention to the second point. Indonesia is said to be joining the five countries with the largest economies in the world. If you quote the latest World Economic Outlook note from the October 2022 edition of the International Monetary Fund (IMF), the five largest gross domestic product (GDP) countries in the world are China (US$ 30.07 trillion), the United States (US$ 25.03 trillion) , India (US$ 11.66 trillion), Japan (US$ 6.11 trillion), and Germany (US$ 5.3 trillion).
Meanwhile, Indonesia’s current position is only in seventh place with a GDP of US$ 4.46 trillion, which has beaten the GDP of Brazil, the UK and France.
When compared to Goldman Sachs’ projections, which still have to wait another 50 years, the IMF actually sees Indonesia’s potential to be considered capable of entering the top 5 in 2024, when Indonesia will commemorate its 100th year of independence.
To recall, in that year Indonesia was actually in the peak of the “demographic bonus”, where the productive population was dominating in Indonesia.
Minister of State-Owned Enterprises (BUMN), Erick Thohir revealed that this projection is not just wishful thinking or dreaming. If the international economic institutions have calculated and projected it like that, then Indonesia can actually make it happen.
“There are four business sectors that have the potential to continue to grow, namely downstream natural resources, digital economy, food security, and tourism and the creative economy,” said Erick quoted by Kompas.com (27/10/2022).
Erick assessed that the four sectors will later be supported by the number of Indonesia’s middle class, which is predicted to reach 223 million people out of a total population estimated at 318.9 million people in 2045.
What do you think of the projections of Comrade GNFI? Will Indonesia be able to reach the top 5 in 2045 or 2075 later?
Source: Bloomberg, Investor.id, Kompas.com, Yahoo Finance