The wedge between emerging market and US GDP growth is forecast to be its narrowest since 1999 this year, as the US enjoys a strong vaccine- and stimulus-led recovery (until earlier this month, the IMF had been forecasting that US GDP growth would outstrip that of emerging markets this year). The economic theory of convergence would suggest that GDP per capita will tend to grow faster in poorer countries than richer ones, but this has often not been borne out by the data. Perhaps aided by the rise of China, emerging economies did start to grow strongly from the turn of the millennium, with over 180 countries converging on the US in 2007 and 2008. But the number of countries converging fell steadily following the Global Financial Crisis. By 2016, only around half of the world’s countries were still narrowing the GDP per capita gap with the US. Covid-19 has proved to be another blow to economic convergence, with medium-term economic effects from the pandemic likely to be heavily related to a country’s ability to borrow, and to vaccine rollouts — two areas where the advanced economies, and the US in particular, hold large advantages.
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