Reassessing the Path to 2075: A Long-Term Economic Projection Excluding Exchange-Rate Effects

Abstract

This paper re-examines Goldman Sachs’ The Path to 2075 – Slower Global Growth, but Convergence Remains Intact (2022) by isolating the long-term projections of global gross domestic product (GDP) from the effects of projected real-exchange-rate adjustments. Using the original econometric framework – comprising demographic, productivity, and investment dynamics – this study reconstructs 2075 GDP estimates under a constant real-exchange-rate scenario, effectively removing the Balassa–Samuelson convergence mechanism that underpins emerging-market currency appreciation. The recalculated outcomes demonstrate significant ranking shifts: the United States becomes the world’s largest economy, China follows in second place, and India remains third, while the rapid ascent of Nigeria, Pakistan, and Egypt is notably curtailed. The analysis reveals that currency appreciation functions as a powerful amplifier of nominal convergence, accounting for between 10 and 20 per cent of the emerging-market growth premium in Goldman Sachs’ baseline. By comparing exchange-rate-neutral projections with the institution’s published forecasts, the research shows how valuation effects can distort perceptions of long-run global balance. A comparative table and ranking-shift figure illustrate how removing exchange-rate assumptions rebalances the projected hierarchy of the world’s largest economies.