Mon, May 01, 2017 - Page 16 News List

The global growth hotspots of the future are here

Bloomberg

If you want to be at the epicenter of global growth in the next few decades, you could do worse than relocate to somewhere like Kigali, Foshan or Belo Horizonte.

That is because many cities that are still comparative backwaters on a global level will become major contributors to economic performance thanks to fast population growth, according to a report by HSBC Holdings PLC economist James Pomeroy.

While wealthier countries are more urbanized, the proportion of urban-to-rural dwellers in emerging markets is expected to climb to 63 percent in 2050 from 50 percent now, according to the study, which draws on research by McKinsey & Co and the UN.

By 2050, about 5 billion people are to live in emerging-market cities and account for more than half of global GDP growth.

“The rise of medium-sized cities in emerging markets, both in terms of their size and wealth, will mean that investors need to focus more on emerging markets and the policy decisions that are being made there,” Pomeroy said. “These cities will start to play a bigger and bigger role in the world economy, and understanding what is going on there will be even more important.”

That means policymakers will have to balance the upsides of urbanization — economies of scale, better productivity and infrastructure, chance encounters that lead to new ideas, better productivity and infrastructure — with the potential downsides, in the shape of increased crime, pollution and perpetually snarled traffic.

If that does not happen, these ill effects could sap economic potential, Pomeroy said.

The urban areas experiencing the biggest increase in population will probably be in Africa.

Kigali, Rwanda’s capital, is expected to see its population of 1.3 million double in the next 15 years.

To help prepare for that the city has developed a master plan for transportation and housing, with the aim of being a slum-free city.

By 2030, 81 of the world’s 100 most populous cities are to be in emerging markets.

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