, On Tuesday May 17, 2011, 9:00 am EDT
With China overtaking Japan as the world's second-largest economy last year, there can be no doubt that emerging markets are becoming increasingly powerful.A new report from the World Bank predicts that by 2025, China, along with five other emerging economies - Brazil, India, Indonesia, South Korea and Russia - will account for more than half of all global growth, up from one-third now.
The report, "Global Development Horizons 2011 - Multipolarity: The New Global Economy," also anticipates that the dollar will be joined by the euro and the renminbi as dominant international currencies. The Chinese government is already easing currency controls and has taken other steps to help the renminbi become a fully convertible reserve currency, which would make it easier for foreign companies to finance projects in China.
Hans Timmer, director of development prospects for the World Bank, said in an interview that despite the current sovereign debt crises roiling Europe, the euro remained a strong and viable currency. "With all the problems they have had in the past 10 years, they have been successful," Mr. Timmer said. "A big part of global reserves is denominated in euros. There is more borrowing going on in euros. As a reserve currency, dollars are still dominant, but countries are drifting away from the dollar into the euro."According to the report, the fast-growing developing countries will continue to outpace those in the developed world - mainly Europe, Japan, Britain and the United States. The emerging economies will grow at an average pace of 4.7 percent a year between now and 2025, while the developed countries will grow at an average of 2.3 percent.
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Backgrounders:
The Demise of the Dollar?
The End of Dollar Supremacy?
Why the Dollar is Falling
Dollars and Politics
What's Behind the Currency War?
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