The shape of the global economy in 2025 looks almost nothing like the shape it had in 1995, and the shape it will have in 2050 will look almost nothing like the shape it has in 2025. The United States and the European Union, which together accounted for approximately half of global GDP at the end of the Cold War, now account for slightly more than a third. China, which was approximately one-twentieth of the global economy in 1990, is now approximately one-fifth of it. India, which has been roughly the same percentage of global GDP it was at independence in 1947 for most of the intervening eighty years, has begun to grow at a rate that compounds into substantially different long-term outcomes. The current period is being interpreted by most major international financial institutions — Goldman Sachs, Citi, the IMF, the World Bank, PwC — as the transitional decades during which the global economic centre of gravity is moving from the North Atlantic to South Asia. The specific timing varies across forecasters. The general direction does not.
According to Goldman Sachs’s official summary of the Path to 2075 projections, the global economy in 2050 will have a substantially different top-five list than the one currently in place. The five largest economies in 2024 are, in order: the United States (approximately $30 trillion), China (approximately $19 trillion), Germany ($4.7 trillion), Japan ($4.2 trillion), and India ($3.9 trillion). By 2050, the Goldman projections place the top five as: China ($45 trillion), the United States ($37 trillion), India ($22 trillion), Indonesia, and Germany. China will have overtaken the United States as the world’s largest economy approximately in 2035. Japan and Germany will have fallen out of the top five entirely, displaced by India and Indonesia. India will have grown approximately five-fold in nominal terms between 2024 and 2050. The relative ranking of the top three (China, US, India) will hold through 2075, but with India overtaking the US in nominal GDP by approximately the final decade of that horizon.
What is driving the projection
The Goldman Sachs methodology is based on a standard Solow growth model — the same framework used in long-run growth economics since the 1950s — with three principal inputs: labour force size, capital accumulation, and total factor productivity (technology). India’s outsized projected growth is, in this framework, primarily a story about labour force demographics. As covered by CNBC’s coverage of the Goldman Sachs analysis, India’s working-age population is projected to continue expanding through approximately 2055 — a window of roughly three decades during which the country will be adding workers to its economy faster than essentially any other major nation. India’s current median age is 28, compared to 39 for China, 38 for the United States, and 48 for Japan. The “demographic dividend” — the period during which a country has a low ratio of dependents to workers — is currently open for India and is projected to remain open for substantially longer than the equivalent windows in China (which effectively closed around 2015) or in the developed economies (which closed in the late twentieth century).
The second major driver in the Goldman projection is urbanisation. As described in a World Economic Forum analysis of India’s projected urban transition, India is currently approximately 35 percent urban — a substantially lower share than the world average of 56 percent or China’s 65 percent. The United Nations projects that India will add approximately 416 million urban residents between 2018 and 2050, more than any other country during that period, and will be approximately 50 percent urban by mid-century. The economic significance of urbanisation is that it moves workers from low-productivity agricultural employment to higher-productivity manufacturing and service-sector employment. The historical record across every industrialising country in the past two centuries shows that the urbanisation transition is associated with substantial increases in per-capita GDP. India is, in 2025, somewhere near the middle of that transition.
The civilizational scale of the shift
The historical context for the Goldman projection is more striking than the year-by-year numbers might suggest. In 1700, before the Industrial Revolution began in Britain, India accounted for approximately 25 percent of global GDP — by some estimates the largest single national economy in the world. By 1820, this share had fallen to approximately 16 percent. By independence from Britain in 1947, the share had collapsed to approximately 4 percent. By the time the Indian economy began its sustained post-reform growth phase in 1991, the share had risen modestly to around 4-5 percent. The current share is approximately 7-8 percent. The Goldman projection, if realised, would bring India’s share of global GDP back to approximately the 20 to 25 percent range that it held before the Industrial Revolution — a return to roughly the level it occupied for most of the previous two thousand years.
The transition is being interpreted by some economic historians as one of a small set of fundamental rebalancings of global economic power in the modern era. The previous three such transitions were Britain’s industrial rise from 1800 to 1850, the United States’ displacement of Britain as the world’s largest economy between roughly 1870 and 1945, and China’s emergence as a major industrial power between 1980 and 2020. The projected India transition, in the Goldman framework and in the parallel projections from PwC, Citi, and the IMF, would be the fourth such reordering in 250 years of industrial-era economic history. The economic centre of gravity of the world, which moved from the Mediterranean to Northwest Europe in the early modern period, from Europe to North America during the twentieth century, and from North America back toward East Asia during the past 40 years, would by 2075 have completed an arc that returns it to South Asia.
What the projection does not guarantee
The 25-to-50-year forecasting horizon involved in the Goldman Sachs projection is, by every available standard, sufficiently long that substantial uncertainty surrounds every specific numerical estimate. Per a comprehensive recent compilation of India’s macroeconomic indicators and the consensus forecast environment, the principal risks to India’s projected trajectory include: the quality of its educational system (India’s literacy and skill-development outcomes remain substantially below the levels achieved in East Asian high-growth economies at comparable stages); the participation of women in the formal workforce (currently approximately 25 percent, compared to roughly 60-70 percent in China and most developed economies); infrastructure development (which has been substantial in the past decade but remains substantially behind the level required to support a $20 trillion economy); climate vulnerability (with the Indo-Gangetic Plain facing some of the most severe projected heat-stress impacts in the world); and regional inequality (with five Indian states accounting for approximately half of national GDP). Any one of these constraints, if not addressed, could substantially reduce the realised growth rate below the Goldman base case.
The historical record on long-range economic projections is also worth keeping in mind. Goldman Sachs’s original 2003 “Dreaming with BRICs” paper, which inaugurated the long-run projection literature for emerging markets, projected that China would overtake the United States as the world’s largest economy by 2041 (it now appears likely to happen by 2035) and that Brazil and Russia would emerge as substantially larger global economies than they have actually become. Specific national trajectories within the broader emerging-market growth pattern have varied substantially from forecast. The general direction — emerging markets growing faster than developed markets, the global economic centre of gravity moving toward Asia — has been substantially correct, but the specific national winners and losers within that pattern have not always been predicted accurately. Whether India in 2075 actually overtakes the United States in nominal GDP, or whether it ends up somewhat behind or somewhat ahead of that specific milestone, will depend on the cumulative outcome of policy and institutional decisions being made now and during the coming decades. The deeper trend the projection captures — that the species’ economic activity is in the process of rebalancing toward a country with 1.4 billion people, the world’s largest working-age population, and the most rapid urbanisation under way anywhere on Earth — is no longer particularly contested.
