WASHINGTON (Reuters) - Growth in emerging-market countries is outpacing developed countries so greatly that the global economic landscape will be wholly altered over the next 15 years, a World Bank study on Tuesday predicted.
“By 2025, six major emerging economies — Brazil, China, India, Indonesia, South Korea and Russia — will account for more than half of all global growth, and the international monetary system will likely no longer be dominated by a single currency,” the study said.
Currently, the U.S. dollar serves as the world’s reserve currency but the study said there has been “a slow decline in its role since the late 1990s” that was likely to continue.
“The most likely global currency scenario in 2025 will be a multi-currency one centered around the dollar, the euro and the renminbi,” the report’s lead author, Mansoor Dailami, said at a press conference.
The World Bank said it expects a sharp divergence in growth to continue between the emerging-market nations and old-line rich powers like the United States and other Group of Seven members: Britain, Canada, France, Germany, Italy and Japan.
The study estimated that emerging economies will grow on average by 4.7 percent a year between 2011 and 2025, twice the 2.3 percent growth rate likely to occur in advanced countries.
By 2025, the United States, the euro area and China will constitute the world’s three major “growth poles,” the World Bank said, providing stimulus to other countries through trade, finance and technological developments and thus creating global demand for all of their currencies, not just the dollar.
The net result, the study concluded, should be greater stability to the international monetary regime than exists in the current dollar-centered system.
A multi-currency regime would more broadly distribute lender-of-last-resort responsibility and make it easier to boost liquidity during times of market distress without as much disruption as is often the case now.
Hans Timmer, the World Bank’s director of development prospects, said the shift to a multi-currency regime would not diminish the dollar’s importance and would not happen rapidly.
“For the United States, it’s still possible that this will only be a gradual prospect,” he said. “Very likely the dollar will still be dominant...but it will no longer be alone.”
Reporting by Glenn Somerville; Editing by Leslie Adler