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Megacities Generate a Third of World’s GDP

Economics / Global Economy Nov 10, 2009 - 04:04 PM GMT

By: Pravda


GDP of the world’s largest cities with emerging economies will experience rapid growth. In 2008 the largest 100 cities accounted for about 30% of global GDP and some have bigger economies than medium-sized countries like Sweden or Switzerland. Within the last three years, Moscow has leaped from the 25th to the 15th place in this rating.

The information provided by PricewaterhouseCoopers is based on the UN statistics regarding the 2008 population size and per capita GDP at purchasing-power parity. Tokyo that produced goods and services totaling to $1.479 trillion last year leads the rating.

The next three positions are taken by American agglomerations: New York ($1.406 trillion), Los Angeles ($792 billion), and Chicago ($574 billion). The size of economy of the first two of these cities amounted to nearly $1.5 trillion each, which is close to the size of economy of Spain.

The most noticeable change in the first ten positions since 2005 was London ($565 billion) getting ahead of Paris ($564 billion) by a billion dollars and taking the 5th place. San Paulo took the 10th place and neared Philadelphia with $388 billion.

The top 10 include two countries-representatives of the Old World, five North American metropolises (including Mexico City with $390 billion, 8th place), and two Japanese agglomerations – Tokyo and Osaka/Kobe ($417 billion, 7th place).

It is worth mentioning that in 2008 only two European cities besides London and Paris were in the top 30 – Moscow and Madrid. In countries like Germany and Italy there is not only one dominating capital city like in Great Britain and France, but several main cities whose economy is considered medium-sized by the world standards.

PwC also released its urban forecast for 2025. Analysts suggest that large cities of emerging countries will experience more rapid growth.

"If you look at the projected percentage GDP growth from 2008 to 2025 of the top emerging and the top advanced economy cities, the comparison is stark. Cities such as Shanghai, Beijing and Mumbai, for example, are projected to grow at around 6-7% per annum in real terms, whereas cities such as New York, Tokyo, Chicago and London grow only at around 2% per annum on average. In absolute terms, the projected rise in Shanghai's GDP between 2008 and 2025 is greater than the combined GDP increase for London and Paris together," said John Hawksworth, head of macroeconomics at PwC.

In 2008 the top 100 included 39 cities from countries with emerging economies and 61 cities from countries with advanced economies. According to the report, by 2025 this gap will be narrowed bringing 48 emerging and 52 developed countries into the top 100.

According to PwC extrapolated data, by 2025, thirty largest cities will include Cairo ($33 billion, 30th place), Istanbul ($367 billion, 28th place), Guangzhou ($438 billion, 21st place), Delhi ($482 billion, 19th place), and Peking ($499 billion, 17th place).

Rio de Janeiro is set to rise from 30th place to 24th, (GDP at $407 billion), Mumbai (Bombay) is likely to storm to 11th from its current place 29 ($594 billion), Sao Paulo is likely to rise to the 6th place ($782 billion). Moscow has a chance to rise to the 12th place with $546 billion. It is obvious that without the growth of GDP of the entire country of Russia Moscow will not be able to do it.

Tokyo has been the leader since 2005. By 2025 the size of the economies of Tokyo and New York will amount to $2 trillion. The third place will be taken by Los Angeles followed by Chicago, London and Paris, whose GPD is significantly higher than the size of the economies of South Africa and Belgium.

Boris Yeremenko

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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