The world economy is set to surpass $100 trillion for the first time in 2022, two years earlier than previously forecast, according to the Centre for Economics and Business Research.
Global gross domestic product will be lifted by the continued recovery from the pandemic, although if inflation persists it may be hard for policy makers to avoid tipping their economies back into recession, the London-based think tank said.
“The important issue for the 2020s is how the world economies cope with inflation,” said Douglas McWilliams, the CEBR’s deputy chairman. “We hope that a relatively modest adjustment to the tiller will bring the non-transitory elements under control. If not, then the world will need to brace itself for a recession in 2023 or 2024.”
The forecast is in line with estimates of the International Monetary Fund, which also predicts global GDP measured in dollars and in current prices will pass $100 trillion in 2022.
In its annual World Economic League Table, the CEBR also predicted that China will overtake the U.S. in 2030, two years later than forecast a year ago. India will regain sixth position from France next year and become third largest economy in 2031, a year later the previously predicted. The U.K. is on track to be 16% larger than France in 2036 despite Brexit. Germany will overtake the Japanese economy in 2033. The latest Omicron variant, however, might upset some of the projections. Climate change will lower consumer spending by $2 trillion a year on average through 2036 as companies pass on the cost of decarbonizing investment, the report forecast.