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2
4
Unprecedented levels of GDP growth since the 1950s
GDP per capita growth
Contributions to global GDP growth
Compound annual growth rate, %
Population growth
4.7
4.8
3.8
3.1
3.6
3.0
2.5
1.9
1.9
1.7
0.9
0.5
<0.1
1–
1000
0.1
0.3
0.1
1000– 1500– 1600– 1700– 1820– 1870– 1900– 1913– 1940– 1950– 1964– 1974– 1984– 1994– 2004–
1500 1600 1700 1820 1870 1900 1913 1940 1950 1964 1974 1984 1994 2004 2010
SOURCE: Jutta Bolt and Jan Luiten van Zanden, The first update of the Maddison Project: Re-estimating growth before 1820, Maddison Project
working paper number 4, University of Groningen, January 2013; UN Population Division; McKinsey Global Institute analysis
7
Capital has become increasingly cheaper
Long-term government interest rates in select developed economies
%
14
12
10
8
6
4
Nominal
values
2
Ex-post
real values
0
1975
1980
1985
1990
SOURCE: Oxford Economics; McKinsey Global Institute analysis
1995
2000
2005
2010
2014
Four disruptive forces changing the picture
Industrialization
and urbanization
in emerging
economies
An aging
world
Disruptive
technologies
Greater global
interconnections
9
Per capita GDP rises in parallel with urbanization
United States
2013
Per capita GDP
1990 PPP $ (log scale)
30,000
Japan
2013
China
2013
South Korea
2013
Brazil
2013
10,000
India
2013
3,000
1820
1950
1891
1,000
1930
1950
1920
300
0
10
20
30
40
50
60
70
80
90
100
Urban population %
SOURCE: UN population Division; The Conference Board; McKinsey Global Institute analysis
12
3,000 times larger than the UK Industrial Revolution
Country
Years to double per capita GDP
1700
United Kingdom
United States
Germany
Japan
South Korea
China
India
1800
Population at start
of growth period (million)
1900
2000
154
9
53
10
28
65
33
48
22
10
1,023
12
16
822
13
Nearly 3 billion people will join the consuming
class by 2025
World population, billion
53%
Share of population
in consuming class
Consuming class
36%
23%
5.3
23%
7.9
Below consuming class
6.8
2.4
4.2
1.2
13%
<1%
3%
7%
1.0
0
1.0
1.3
0.1
1.2
1.6
0.1
1820
1870
1900
1.5
2.5
0.3
2.2
1950
3.7
0.9
4.0
4.4
1990
2010
2.8
1970
SOURCE: Homi Kharas; Angus Maddison; McKinsey Global Institute Cityscope 2.0
3.7
2025
14
15
16
Fertility rates have been declining globally
Children per women (over lifetime)
6.5
6.0
5.5
5.0
4.5
Brazil
China
Germany
India
South Africa
US
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0
1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010
SOURCE: UN population data; World Bank; McKinsey Global Institute analysis
17
By 2040, about 1 in 4 people in advanced economies
and China will be 65 years old or older
Share of population 65+, 2040E
65+ population
2040 share,
Percent
n/a
<5%
5-12%
12-20%
20-35%
SOURCE: UN Population Division; McKinsey Global Institute analysis
18
Technological breakthroughs are speeding up
First website
1991
First phone
call 1876
Hargreaves’
Jenny 1764
Advanced
robotics
GM’s Unimate
1962
198
years
SOURCE: McKinsey Global Institute analysis
Internet of
things
16
years
115
years
Mobile
Internet
First iPhone
2007
Google’s
Schaft 2010
48
years
Artificial
intelligence
Adoption of new technologies is also accelerating
Time to reach 50 million users
38
years
13
years
4
years
Radio
Television
SOURCE: Press reports; McKinsey Global Institute analysis
Pod
3
years
Internet
1
9
year
months
Facebook
Twitter
20
Technology is disrupting knowledge work
21
Cross-border flows have increased 5-fold since 1990
Financial flows
Service flows
Goods flows
Goods, services, and financial flows; share of GDP, 1980–2012
$ trillion, nominal; %
X
% global GDP
30
25
20
15
10
5
0
1980
85
90
95
2000
05
10
24%
20%
23%
25%
36%
44%
39%
SOURCE: UN Comtrade; International Monetary Fund Balance of Payments; World Trade Organization; McKinsey Global Institute analysis
12
22
Networks of global trade flows are expanding
and becoming much more interconnected
USD 50–100 billion
USD 100–500 billion
USD 500 billion or more
Lines show total trade flows between regions, figures in bubbles show participation in world trade
1990
100% = $1.8 trillion
2013
100% = $17.2 trillion
4%
2%
2%
12%
5%
41%
8%
8%
32%
3%
2%
5%
4%
6%
22%
4%
32%
7%
SOURCE: The Conference Board Total Economy Database; UN Population Division; McKinsey Global Institute analysis
23
The economic center of gravity is shifting
east and south at an unprecedented speed
Earth’s economic center of gravity
1 CE
SOURCE: Angus Maddison; University of Groningen; McKinsey Global Institute analysis
The economic center of gravity is shifting
east and south at an unprecedented speed
Earth’s economic center of gravity
1980
1970
1960
1950
1990
2000
2010
1940
1913
2025
1820
1500
SOURCE: Angus Maddison; University of Groningen; McKinsey Global Institute analysis
1 CE
1000
There will be 150 cities in OECD countries with GDP
over $50 billion by 2025
GDP 2025 (RER)
$ billion
50-100
100-200
200-500
>500
Cities with GDP1 greater
than $50 billion in 2025
N = 147 cities
1 Predicted real exchange rate.
SOURCE: McKinsey Global Institute Cityscope 1.1
Developing countries will also have ~150 cities with
a GDP greater than $50 billion by 2025
GDP 2025 (RER)
$ billion
50-100
100-200
200-500
>500
Cities with GDP1 greater
than $50 billion in 2025
N = 146 cities
1 Predicted real exchange rate.
SOURCE: McKinsey Global Institute Cityscope 1.1
Africa’s cities will grow strongly
African cities with GDP1 greater than $20 billion, 2007 and 2025
In 2007, only seven African cities had a GDP
greater than $20 billion
By 2025, this list will expand to include 22
cities spread across ten countries
Constantine
Algiers
Alexandria
Tunis
Banghazi
Oran
Tripoli
Casablanca
Tripoli
Cairo
Cairo
Ibadan
Lagos
Khartoum
Abuja
Lagos
Luanda
Nairobi
Luanda
Huambo
Pretoria
Tshwane
Vaal
Triangle
Johannesburg
Cape Town
1 Predicted real exchange rate.
SOURCE: McKinsey Global Institute Cityscope 1.1
Cape Town
Johannesburg
Durban
East London
Even within countries, granular product strategies will
CHINA EXAMPLE
be necessary
Jingjinji is most concerned about
product safety
Jingjinji cluster
Shandong
cluster
Shandong prefers Chinese brands
and has high brand loyalty
Shanghai prefers well-known brands,
especially foreign brands
Shanghai cluster
Shenzhen cluster
SOURCE: McKinsey Insights China
Shenzhen is least concerned about
product safety
By 2025, emerging regions are expected to be home to
almost 230 companies in the Fortune Global 500
23
Total in
emerging
regions
23
24
130
229
EMERGING REGIONS
13
8
2
15
7
1
6
12
6
8
9
95
2
3
13
26
11
12
26
34
120
477
477
Other emerging regions
Africa and Middle East
Southeast Asia
South Asia
Eastern Europe and
Central Asia
Latin America
China region
DEVELOPED REGIONS
476
370
271
1980
1990
2000
2013
SOURCE: Fortune Global 500; MGI CompanyScope; McKinsey Global Institute analysis
2025
30
Externally
focused
Agile and
low cost
Optimist
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