Finance Finance News Australian economy to become 11th largest, China to be the biggest

Australian economy to become 11th largest, China to be the biggest

Australia's economic growth has relied heavily on the resources sector. Photo: AAP
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Australia will become the world’s 11th-biggest economy within a decade, and China will become the largest, a report predicts.

The London-based Centre for Economics and Business Research has forecast Australia will climb two places on its world economic league table by 2026 from its current ranking of 13.

The report also predicts China will overtake the United States as the world’s biggest economy in 2030.

Countries that depend on brainpower to drive their economies will generally overtake those dependant on natural resources, however, much of Australia’s economic growth is based on population growth.

While Australia’s growth has been fuelled by the resources sector in recent years, the centre noted that it has become one of the most popular countries in the world for inward migration.

And it’s particularly Australia’s intake of migrants with highly sought-after skills that will help fuel its future growth.

“The growing population means the economy is forecast to rise from 13th-largest in 2017 to 11th-largest economy in 2026,” the centre’s 2018 World Economic League Table said.

“Investment in urban infrastructure will need to accelerate as population increases.”

Australia took in just under 190,000 permanent migrants during the 2015-2016 financial year, the majority of whom were skilled.

Some, however, believe Australia should trim its intake.

A survey published by the Australian Population Research Institute in October found three quarters of Australians believe the country doesn’t need any more people and nearly half supports a partial ban on Muslims migrants.

economic growth
Energy prices are predicted to fall in the next 25 years due to renewables. Photo: AAP

The institute said at the time it believed the results were driven by the impact of population growth on people’s quality of life and the rapid change in Australia’s ethnic and religious make-up.

But the Centre for Economics and Business Research’s report says that with the digital revolution set to power the world economy through to 2032, countries will need creative workers and one of the best ways to get them is through migration.

It also predicts energy prices will fall in the next 25 years amid a substantial rise in the use of renewables for power generation and growth of energy supplies from fracking.

Resource-rich economies that fail to diversify risk having their economic growth impeded, the centre warned.

Meanwhile some of Australia’s closest neighbours are expected to enjoy booms, with the centre forecasting the economic rise of developing countries.

Indonesia and Korea are expected to enter the top 10 of the world’s biggest economies by 2032, with Taiwan, Thailand and the Philippines all on track to enter the top 25.

“By 2030 three of the world’s top four economies will be Asian (China, India and Japan),” the centre said.

– with AAP