The International Monetary Fund, IMF, is now predicting the the economy of China will surpass that of the United States in 2016. So crank up the David Bowie song, ‘Five Years’, because if the IMF is right, “that′s all we’ve got!” Many analysts have been predicting that this day will come, but most put it much further in the future. Now, what the IMF is saying in its latest document, April, 2011 World Economic Outlook, is that by 2016, in terms of GDP based on ‘purchase power parity’, or PPP, China will have caught up to the U.S. by 2016. When you dig deeper into the data, there are many other factors to consider, some good, and some bad, for America.

obama shows around wu

For example, if you just look at investment as a percentage of GDP, China has been out pacing us for a very long time. Not a good thing. But if you look at the same numbers as the previous chart, GDP based on PPP, and this time adjust it per capita, you′ll see that the IMF predicts that by 2016, the average American salary will be some $57,319.74 per year compared to the average Chinese salary of only $13,729.03. A good thing for America! But most of the rest of the stats on the IMF chart consists of better news for China than us, such as savings rates, debt levels, and unemployment rates.

On April 16, the World Bank and IMF held its annual Spring Meeting in Washington, DC. While generally optimistic, they did indicate potential concerns over the situation in North Africa and the Middle East. They also view the rise in food prices globally as another issue that could have a dramatic impact. The president of the World Bank even went as far to say that a single event, such as a drought in a major food producing region, could plunge the world into crisis. That developing countries are especially at risk if food becomes a volatile commodity.

As we watch more warnings about the state of our economy, our national Debt and ever-increasing government spending levels, there is little doubt that the United States is being mismanaged. The International Monetary Fund predicting the ‘Age of America’ ending by 2016 and China surpassing us as the world′s leading economic power seems to be inevitable. Unless, of course, the next president to take office in 2012 understands global economics better than our current administration. The IMF bombshell that America is in decline is still a prediction and is not written in stone.

Related Articles:

IMF: World Economic Outlook Database April 2011

World Bank: Development Committee, Spring 2011 DC Communique

IMF bombshell: Age of America nears end