The double whammy for the European Union GDP is Brexit and COVID. In 2019, the EU had a combined GDP of $18.3 trillion. The UK leaving removes $2.5 trillion. COVID removed another 10-12% in 2020. The Jan, 2021 GDP will be after Brexit is official and enacted on Dec 31, 2020. $15.8 trillion after the UK leaves and down 10% from COVID to $14.3 trillion. China should be at $15.0 trillion.
COVID Boosted China’s GDP from 67% of US GDP to 76%
In 2019, China’s economy on an exchange rate basis was about 67% the size of the US economy but now China is at 76% of the US economy. In 2019, the US economy was at $21.4 trillion and China (without Hong Kong) was at $14.1 trillion. In mid-2020, the US economy is at $19.4 trillion and China is at $14.7 trillion. China picked up about 5% on currency exchange and had a negative first quarter but recovered in Q2 of 2020.
Before COVID, the expected year when China’s GDP would pass US GDP had slipped further and further into the future. Many in 2019 thought it would take well past 2030. Now if China maintains 6% annual GDP growth and its currency was to strengthen to an exchange rate of 6.0, then China could pass the US economy in 2025.
Mark Kruger had a table for when China’s GDP passes the US, based on different China GDP growth rates and exchange rates.
COVID Crashed Economies and Markets
Amundi Asset Management projects Global GDP to shrink between -3.5% and -4.7% y-o-y. There were downgrade for the UK and a few South Asian economies (e.g. Malaysia, Philippines) where Q2 GDP came in weak. The 2020 downward revision will trigger a stronger base effect in 2021: we therefore mildly revised upwards our GDP growth forecasts for next year to 4.4-5.7%
The big bank, ING, new September GDP forecast for China is up to 2.5% annual growth over 2019 and the yuan is strengthening to 6.70.
The shrinking of the US and European economies and the currency hits give China a nearly 10% to 18% relative boost over various advanced economies.
Goldman Sachs projects India’s GDP to shrink by 12% in 2020 before rebounding in 2021 by nearly 10%.
India had hoped to have a $5 trillion GDP by 2025, but now the hope is to reach that goal in 2028. India’s GDP is now $2.4 trillion.
Many economies will take until 2021-2023 to recover to where they were at the end of 2019.
COVID has crushed the oil markets, crashed national economies, and accelerated the adoption of internet, streaming and other digital technologies.
SOURCES- ING, IMF, Amundi Asset Management, Economic Times India
Written By Brian Wang, Nextbigfuture.com