How global stock market rankings are forecast to change

The US has had the world’s largest economy for more than a century — a title it’s expected to relinquish in the coming decades. But even as US GDP is forecast to be surpassed in the years ahead, the country is projected to remain world leading when it comes to wealth and the size of its stock market, according to Goldman Sachs Research’s report “The Path to 2075.”

Demographic projections and long-term drivers of productivity can help us glimpse how the global economy may look 50 years in the future. In fact, these longer-term forecasts are, in some ways, easier than shorter estimates over a year or two, which can be derailed by booms, recessions, and other surprises. That’s because some of the key variables underpinning long-term GDP growth are slower to change, while the shorter-term volatility of the business cycle tends to average out over time,  say Kevin Daly, co-head of Central & Eastern Europe, Middle East, and Africa Economics in Global Macro Research, and economist Tadas Gedminas.

“Over the very long term, the things that tend to drive the size of economies are things like population growth and long-term productivity growth, which tend to be slower-moving and less variable,” Daly says.

The relative importance of capital markets in emerging economies is nevertheless projected to grow, from around one-quarter of total global market cap today to more than half by 2075. The research demonstrates that while rich, developed countries will remain critical in the decades that come, it won’t be possible to capture long-term, worldwide growth trends without exposure to emerging economies and their financial markets.

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