In an article published in the Financial Times (FT) on March 26, Valentina Romei and John Rood wrote that Asia is already home to more than half of the world's population, and of the world's 30 largest cities, 21 are in Asia. By next year, Asia will also become home to half of the world's middle class (defined as those living in households with daily per capita incomes of US$10-100 at 2005 purchasing power parity).
As the FT noted, since 2007, Asians have been buying more cars and trucks than people in any other region — by about 2030 they will be buying as many vehicles as the rest of the world combined, according to LMC Automotive.
The FT calculates that Asian economies (as defined by the UN trade and development body UNCTAD) will be larger than the rest of the world combined in 2020, for the first time since the 19th century. The new Asian century begins next year.
The method used, which assesses economies by PPP, is widely considered the most relevant measure as it takes into account what people can actually buy in developing countries where prices are often cheaper. Even at market exchange value, Asia still accounts for 38% of global output, up from 26% in the early 2000s.
China is now a bigger economy (on a PPP basis) than the US, accounting for 19% of world output this year, more than double the 7% recorded in 2000. India is now the world's third-largest economy, with a GDP about double the size of either Germany or Japan, both of which had economies larger than India's on a PPP basis in 2000. However, the new Asian age is coming not just because of its two largest economies, but also thanks to growth among smaller and midsize countries. For example, the FT notes that Indonesia is on track to become the world's seventh-largest economy (PPP basis) by 2020, and will have overtaken Russia by 2023 as the sixth biggest.
Asia's recent emergence, which began with Japan's post-war economic surge, represents a return to an historical norm. Asia dominated the world economy for most of human history until the 19th century. Indeed, in the 18th century, India's share of the world economy was as big as Europe's, according to Indian politician and author Shashi Tharoor. Then, for three centuries, Asia's place in the world shrank as western economies took off, powered by what academics refer to as the Scientific Revolution, then the Enlightenment and the Industrial Revolution.
Asia remains poorer than the rest of the world, but the gap is narrowing. China's GDP per capita at PPP is still only about one-third of that of the US, and about 44% of that of the EU. India has a GDP per capita at PPP of only about 20% that of the EU, according to IMF data. But India and China's per-capita income gap with the US and Europe has narrowed dramatically since 2000. Over that period, China has become nearly five times richer than the average per capita output of sub-Saharan Africa (the two regions were at similar levels in the mid-1990s).
By any measure, Asia is about to reoccupy the centre of the global economic stage. When it does, the world will have come full circle.