Emerging market city economies set to rise rapidly in global GDP

Price Waterhouse Coopers

Emerging market city economies set to rise rapidly in global GDP rankings says PricewaterhouseCoopers LLP
* Shanghai projected to rise from 25th to 9th place in the global city GDP rankings between 2008 and 2025 and show the strongest growth rate of any current top 30 city
* Mumbai to rise from 29th to 11th and Beijing from 38th to 17th place
London, 5 NOV 2009 — Emerging market city economies are projected to rise significantly up the global GDP rankings between 2008 and 2025 according to PricewaterhouseCoopers LLP research. The figures provide an insight into how the global economic landscape looks set to change and which cities may provide the most compelling draw for capital and labour in the future.
The largest 100 cities accounted for around 30% of global GDP in 2008 and some have bigger economies than medium-sized countries like Sweden or Switzerland. However, systematic global data on the size of city economies has been lacking and has tended to focus on ranking by population which gives only part of the picture. PwC published the first set of global city GDP rankings in March 2007 and has now updated these rankings to 2008 with projections to 2025.
John Hawksworth, head of macroeconomics at PricewaterhouseCoopers LLP, said::
“Global economic activity is concentrated in the world’s largest cities and it is important to understand how those cities compare, especially when many developed economies are experiencing economic difficulties while countries like China and India continue to grow.”
Looking at the 2008 rankings (see table below), Mexico City and Sao Paulo are the emerging economy cities already in the top 10 when ranked by GDP, but Buenos Aires is not far behind in 13th place and Moscow in 15th. Shanghai and Mumbai have jumped into the top 30 with their strong growth between 2005 and 2008. There are also a number of fast-growing emerging economy cities just outside the current top 30, including Istanbul (34th), Beijing (38th), Manila (40th), Cairo (42nd) and Guangzhou (44th).
Looking ahead to 2025, the study sees the rise of the emerging economy cities continuing. Shanghai, Mumbai, Beijing, Delhi, Guangzhou, Rio de Janeiro, Istanbul and Cairo are all expected to rise significantly in the global city GDP rankings as the attached table shows.
Hawksworth added:
“If you look at the projected percentage GDP growth from 2008 to 2025 of the top emerging and the top advanced economy cities, the comparison is stark. Cities such as Shanghai, Beijing and Mumbai, for example, are projected to grow at around 6-7% per annum in real terms, whereas cities such as New York, Tokyo, Chicago and London grow only at around 2% per annum on average. In absolute terms, the projected rise in Shanghai’s GDP between 2008 and 2025 is greater than the combined GDP increase for London and Paris together.”
Nonetheless, Tokyo has retained the top ranking it held in 2005, remaining narrowly ahead of New York, with both having economies worth nearly $1.5 trillion in 2008 (broadly similar to national economies such as Spain) and projected to grow to nearly $2 trillion by 2025. Los Angeles is in clear third place with Chicago, London and Paris vying for the next three places (each of which has an estimated GDP significantly higher than national economies such as South Africa and Belgium).
The most notable changes in top 10 rankings since 2005 have been London edging ahead of Paris to 5th place and Sao Paulo jumping into 10th place. Aside from London and Paris, only two other European cities (Moscow and Madrid) made the top 30 in 2008. This reflects the fact that countries like Germany and Italy (which only became unified nation states in the 19th century) have several major cities that are medium-sized in global terms, rather than one dominant capital city as in the UK or France.
In 2008 the total number of emerging economy cities in the top 100 was 39 with the advanced economies providing 61. As shown in the attached table (in note 2 below), in 2025 this gap is projected to narrow sharply with the emerging economies providing 48 of the top 100 cities and the advanced economies 52.
Top 30 urban agglomeration GDP rankings in 2008 and illustrative projections to 2025
(using UN definitions and population estimates)
Click to read more“>Click to see the tables

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