The world is expected to witness a new economic world order with a prospective shift from advanced to emerging economies over the next few decades.
India could edge past Unites States of America to become the world's second largest economy in purchasing power parity (PPP) terms, says a report.
According to PwC, E7 economies comprising Brazil, China, India, Indonesia, Mexico, Russia and Turkey would grow at an annual average rate of almost 3.5 per cent over the next 34 years, compared to just 1.6 per cent for the advanced G7 nations of Canada, France, Germany, Italy, Japan, the UK and the US.
"In fact, China has already overtaken the US to become the world's largest economy in PPP terms, while India currently stands in third place and is projected to overtake the US by 2040 in PPP terms," PwC said.
Moreover, PwC believes Vietnam, India and Bangladesh would be three of the world's fastest growing economies over this period.
"We will continue to see shift in global economic power away from established advanced economies towards emerging economies in Asia and elsewhere. The E7 could comprise almost 50 per cent of world GDP by 2050, while the G7's share declines to only just over 20 per cent," PwC Chief Economist and co-author of the report John Hawksworth said.
Deepankar Sanwalka, Leader- Advisory, PwC India said "this shift in global economic power to emerging economies is one of the most relevant and pronounced megatrends for India".
Sanwalka further said: "The confidence of Indian CEOs about their company's prospects and the kind of new business opportunities we see in India today is a testimonial of that trend".
However, to realise this growth potential, emerging market governments need to implement structural reforms to improve macroeconomic stability, diversify their economies away from undue reliance on natural resources (where this is currently the case), and develop more effective political and legal institutions.
"Policymakers across the world face a number of challenges if they are to achieve sustainable long-term economic growth of the kind we project in this report," Hawksworth said.
He noted that "falling global trade growth, rising income inequality within many countries and increasing global geopolitical uncertainties are intensifying the need to create diversified economies which create opportunities for everyone in a broad variety of industries."