New World Order; power shifting from West to East

The world economy is in a super-cycle. This is a period of historically high global growth, lasting a generation or more.There are many factors driving this, including rising trade, high rates of investment, rapid urbanisation and technological innovation.

Super cycles are also characterised by the emergence of economies enjoying rapid growth, such as China, India and Indonesia now.

The world economy has twice enjoyed super-cycles before.

The first, from 1870 to 1913, saw a significant pick-up in global growth, with the world growing on average each year by 2.7 per cent, a full one per cent higher than previously seen.

That cycle was led by the emergence of the U.S. and saw increased trade and greater use of technologies from the Industrial Revolution.

The second super-cycle, from 1945 to the early 1970s, saw growth averaging 5 per cent and was characterised by the post-War reconstruction and catch-up across large parts of the globe.

It saw the emergence both of a large middle-class in the West and of exporting nations across Asia, led by Japan.

We may now be in another super-cycle, with aspects similar to those seen in the first two super-cycles.

For people in Asia and across the emerging world, the idea of strong growth may not sound unusual.

But for many in the West, the thought of a super-cycle may sound strange, given the present problems confronting the world economy.

Yet, the reality is the world economy now is over $62 trillion, about twice the size it was a decade ago, and it has already exceeded its pre-recession peak.Over the past two years, its rebound has been driven by policy stimulus in the West and by stronger growth in the East.

Indeed, emerging economies, which are one-third of the world economy, currently account for two-thirds of its growth. This trend looks set to continue.By 2030, the world economy could grow to $308 trillion.