Brazil to have 27% of U.S. standard of living by 2060, OECD says
The standard of living of Brazilians could almost stagnate over the next 40 years: from 23% of the U.S. equivalent today to only 27% in 2060 if there is no major structural overhaul in the country. The convergence on the Chinese and Indian side is much faster.The projection is from the Organization for Economic Co-operation and Development (OECD), in a study released Tuesday on the long-term fiscal pressure in its 38 member countries, aiming to give a dimension of the challenges ahead.The reference scenario predicts that trend annual GDP growth in the OECD + G20 countries combined will decline progressively from around 3% post-Covid to 1% in 2060, mainly due to a slowdown in the large emerging economies.China and India will continue to account for the bulk of world economic growth. India’s contribution is expected to exceed China’s from the 2040s onwards, because the Chinese population is projected to have shrunk by then. However, China remains the largest economy throughout the projection period on a purchasing power parity basis.Real GDP growth per capita in the OECD area will be more stable, at around 1.25% per year, below historical levels. And it should decelerate in the emerging economies of the G20, except for those with already weak performance recently, such as Brazil, Argentina, and South Africa.The OECD projects an increase in Brazil’s potential GDP per capita of 1.1% per year between 2020-2030, rising to 1.4% in 2030-2060. In turn, China, which had a real GDP growth of 10% per year between 2000-2007, would have 4.2% annually between 2020-2030 and would fall to 2.1% between 2030-2060.Considering the small, and in some cases negative, employment contributions, the organization estimates that the main factor that explains a more optimistic GDP per capita trajectory of G20 emerging market economies is labor productivity growth - particularly the labor efficiency component. Strong, albeit slow, productivity growth in India, China and Indonesia reflects recent performance and leads to a catch-up effect of progressive convergence compared to the United States.In the other large emerging economies of the G20 (Russia, Brazil, Argentina and South Africa) "continuous relatively weak productivity performance implies much slower convergence to the U.S. standard of living."Brazil’s standard of living today would represent only 23% of that of the USA, and in 2060 it would rise to no more than 27%. India, on the other hand, will be able to...
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