Shanghai Seen Replacing Paris as Global Growth Center by 2035
A sign that balance of the world’s economy is shifting east, according to an Oxford Economics study.
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(Bloomberg) -- Shanghai will replace Paris in the top five of global city economies by 2035 in a sign the balance of the world's economy is shifting east, according to an Oxford Economics study.
The top 780 cities in the world, which already produce almost 60 percent of global activity, will add almost half a billion more people and $32 trillion in output over roughly the next couple of decades, Mark Britton, an economist at Oxford Economics, writes in a research note published this week.
The eye-popping headline figures mask significant disparities between cities studied, Britton wrote. Among the big winners: emerging Asia, with three other Chinese cities entering into the top 10: Beijing, Guangzhou, and Tianjin.
“The world’s urban center will continue to shift eastwards, particularly as growth in a number of cities in the West is likely to be constrained by aging, and in some cases, declining, population,” Britton wrote.
The changing power balance is shown by the forecast that the combined output of Asian cities will overtake that of urban centers in Europe and North America in about a decade, according to Britton. A decade ago, the cities in the West claimed twice the aggregate GDP of those in Asia.
Non-Chinese Asian cities will also post impressive growth, with places like Mumbai and Kuala Lumpur adding $4.7 trillion in GDP through 2035. But China’s urban star power will increase by about $14 trillion over that period, and 15 of its cities will join the top-100 rankings, on top of 18 already on the list.
The estimates are based on constant 2015 prices and exchange rates.
Two cities in Latin America – Santiago and Rio de Janeiro – will drop out of the top-100 rankings, and while the Middle East looks to be making gradual improvement, cities there could get a boost if development plans like Saudi Arabia’s are implemented. There will be rapid urbanization in African nations, but it will take time for that to translate into big economic gains, Britton estimates.
That challenge for policy makers – leveraging their populations to spur the economy – could make or break some of these cities, Britton warned.
“Rapid population growth in emerging cities requires considerable management to ensure the infrastructure can accommodate the additional people,” he wrote. “This includes the provision of adequate housing, support services and transport networks, whilst also developing and maintaining the city as an attractive place to live and work.”
To contact the editor responsible for this story: James Mayger at jmayger@bloomberg.net, Jeff Kearns
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