Australia looks likely to drop out of the world’s 20 biggest economies by 2050 with fast-growing developing countries such as Argentina, Saudi Arabia and Vietnam set to overtake it, research from PricewaterhouseCoopers (PwC) has found.
Based on 2011 numbers, the PwC report ranks Australia's $US893 billion economy as the 17th largest economy in the world. By 2030, the slide will have begun with Australia slipping to 18th position with an estimated economy of $US1535 billion.
The size of economies were estimated based on predicted gross domestic product (GDP) in purchasing power parity (PPP) terms.
Come 2050 and the PwC report predicts that Australia will no longer be able to count itself amongst the 20 largest economies, which could jeopardise Australia's role in forums such as the Group of 20 (G20).
“Since the gold rush of the 20th century we've probably punched above our weight, but as the world is evolving (and) we're coming back to the field,” PwC economist Jeremy Thorpe told the AFR.
China is set to take the top spot from the US as the world’s largest economy by 2017 with an estimated GDP at PPP of $US53,856 billion.
By 2050, India is expected to have become the world’s third largest economy, behind the United States with Brazil sitting in fourth place, followed by Japan, Russia and Mexico.
‘‘The report shows that all the talk about the Asian Century is certainly very true,’’ Thorpe said.
‘‘That’s a combination of ... the continued urbanisation and the next phrase of development of these countries. And it’s coupled with the demographics of these countries - young populations in a different cycle of growth.’’
In October of last year, Australia's economy overtook Spain's to become the 12th-largest in the world, according to the Government's analysis of new International Monetary Fund (IMF) data.
Treasurer Wayne Swan described the result as a "remarkable achievement" given Australia's relative population size.
But moving forward to 2050, ‘‘the key thing for Australia is that we will become less significant globally because the size of our economy in relative terms is smaller,’’ Mr Thorpe said.
‘‘But we will still be an advanced economy with high per-capita incomes. People will still look to us as an important country ... but in absolute terms our significance is going to decrease and that’s just a rebalancing of the global economy as the less-developed countries become more developed over time.’’
Treasurer Joe Hockey can't guarantee that government spending will be cut in his second budget on May 12.