Everyone wants to know what the future looks like.
Investors are no different: after all, investment performance largely reflects expectations of future growth. Get that right, and you can do very well – especially if the time frame is long enough to overcome short term volatility.
With those thoughts in mind, it is fascinating looking at Ray Dalio’s charts of the estimated annual real GDP Growth over the next 10 years by country.
Source: Ray Dalio, The Great Powers Index 2024
Since 2021, hedge fund manager Ray Dalio has published reports on global power dynamics amid evolving geopolitical and economic trends.
In particular, Dalio analyses the future prospects of nations shaped by labour market forces, economic stability, and social factors. Looking ahead, many advanced economies are expected to experience slower growth as they grapple with their highest debt levels since World War II. Meanwhile, emerging markets are forecasted to achieve the strongest growth, fueled by rising productivity.
Does Ray Dalio have credibility? Yes, he does. He is an American investor and hedge fund manager, who served as chief investment officer of the world’s largest hedge fund, Bridgewater Associates, since 1985. He founded Bridgewater in 1975 in New York. In 2013, Bridgewater was listed as the largest hedge fund in the world, and in 2020, Bloomberg ranked him the world’s 79th-wealthiest person. Dalio is the author of numerous books, the most recent of which is “The Changing World Order: Why Nations Succeed and Fail,” published in 2021.
Dalio writes, “My study of history has shown me that there are five big, interrelated influences that are driving the changing world order and that they tend to evolve in big cycles. In order of most concerning over the near term, they are:
- how well the internal order (system) works within countries, especially the United States, to influence,
- how well people within them work together,
- how well the world order (system) works to influence how well countries work with one another,
- how well the debt/money/economic system works,
- the force of nature, and
- how well humankind invents and decides to use new and better approaches and technologies.
How these five forces work and interact with each other shapes what happens. In this study, I look at these forces through hundreds of individual indicators to build up a picture for the world and across each major country.”
The graphic above shows annualised 10-year real GDP growth projections, based on analysis from Ray Dalio’s Great Powers Index 2024. Below we show one of the many tables included in Dalio’s analysis to give a sense of his detailed process.
Source: Ray Dalio Power Index
As for economic growth prospects, based on Dalio’s leading indicators, India is projected to see the strongest real growth over the next 10 years (about 6%), reflecting modest workforce growth, competitive labour, high rates of investment, and favourable culture. Indonesia, Turkey, China, and Saudi Arabia follow as the fastest growing of the major economies.
