‘Population a headache but part of 3G index’

CLARK FREEPORT, Pampanga , Philippines  – A runaway population may be a headache, but for Citigroup it’s part of the global growth generator or 3G index, which can signal huge growth potential for the Philippines and 10 other countries.

“Using that index the nations to watch over the coming years are Bangladesh, China, Egypt, India, Indonesia, Iraq, Mongolia, Nigeria, the Philippines, Sri Lanka and Vietnam,” said Citigroup chief economist Willen Buiter in an article written by Patrick Allen of CNBC.com for USA Today. Buiter called 3G a “measure of economic progress.”

“They are our 3G countries,” he said, referring to the 11 nations.

“For poor countries with large young populations, growing fast should be easy: open up, create some form of market economy, invest in human and physical capital, don’t be unlucky and don’t blow it. Catch up, and convergence should do the rest,” Buiter added.

“The world is going to become richer and richer as developing economies play catch up over the coming years,” he said.

“Occasionally, there will be growth disasters, driven by poor policy, conflicts, or natural disasters. When it comes to that, don’t believe that ‘this time it’s different’,” he said.

“There are some easy wins for poor countries with big, young populations,” he said.

“We expect strong growth in the world economy until 2050, with average real GDP growth rates of 4.6 percent per annum until 2030 and 3.8 percent per annum between 2030 and 2050,” Buiter added.

“As a result, world GDP should rise in real PPP-adjusted terms from $72 trillion in 2010 to $380 trillion in 2050,” he said. PPP is purchasing power parity.

“As the world watches oil prices rise sharply amid unrest in the Middle East, Buiter’s analysis of the world’s long-term prospects offer some hope that better times are ahead but if he is right, power will shift from the West to the East very quickly,” Allen said.

“Developing Asia and Africa will be the fastest growing regions, in our view, driven by population and income per capita growth, followed in terms of growth by the Middle East, Latin America, Central and Eastern Europe, the CIS, and finally the advanced nations of today,” he wrote.

“China should overtake the US to become the largest economy in the world by 2020, then be overtaken by India by 2050,” Buiter said.  –Ding Cervantes (The Philippine Star)