Global gross domestic product will swell to $143 trillion by 2030, allowing for inflation and market-exchange rates, from $62 trillion in 2010, with China and other emerging markets accounting for about two thirds of the rise, estimates Gerard Lyons, chief economist and group head of global research in London for Standard Chartered, which generates most of its earnings from Asia.

Investment, Urbanization

Lyons and his colleagues predict a "super-cycle" of historically high growth that will last at least a generation and will be led by booming trade, investment and urbanization, according to a report published in November. He reckons such a cycle has occurred only twice since the end of the 18th century: the four decades before World War I and the three following World War II. He's betting the new phase will contribute to a reversal in the three-decade decline for U.S. bond yields after 10-year Treasury notes lost an average 40 basis points a year since the early 1980s.

Richard Dobbs, a director of the research division at New York-based McKinsey & Co., will use the Davos meeting to highlight a study by the international consulting firm that sees an imminent end to cheap capital. The causes are a building bonanza in developing economies and aging populations who are draining their savings, according to the report, which was released Dec. 9

David Fuller's view Asian-led GDP growth is a familiar theme for veteran subscribers. However it has been difficult for some western commentators to accept that the baton for economic leadership had been picked up by China and its progressing regional neighbours over a decade ago.

Among the initial evidence of this transformation was the recovery in industrial commodities, including precious metals, as Asia modernised, urbanised and developed its many manufacturing industries. Simultaneously, this fed a boom in resources economies.

Fullermoney was an earlier advocate of a supercycle in commodities, following a 21-year bear market for resources which ended approximately a decade ago.

Supercycles usually last for at least a generation, while recessions occur somewhat more frequently. Consequently there has never been a supercycle that was not interrupted by recession, and this one was hit by the West's credit and insolvency crisis.

Asia and the resources economies experienced brief growth recessions while most Western economies were hit hard. The former are now leading what is slowly becoming a global recovery, although many of the West's problems of debt and high unemployment will linger for years.

Gerard Lyons of Standard Chartered Bank believes this is a global growth supercycle. I think he is probably right and subscribers will have seen his report, which is posted once again for your convenience. However there are plenty of obstacles in the path of the supercycle which investors need to be aware of.

These will mostly concern commodity prices and interest rates. We saw how surging commodity prices can weigh on stock markets in 2008, before the banking collapse, and we have seen them worry investors more recently. However this may be no more than a squall, because crude oil is not yet surging. Nevertheless we need to remain watchful because the combination of shortages and speculation could very easily cause agricultural commodity prices to spike higher.

Any GDP growth supercycle of the sort advocated by Standard Chartered would create additional surges in commodities. These are both an opportunity and a hazard, as I have mentioned before. Also, strong global GDP growth would lead to other forms of overheating, to which central banks would respond with higher interest rates. The higher rates go, the more susceptible equities and commodities are to significant corrections and probably some short, sharp bear markets.

Overall, a growth supercycle would be more bullish than bearish for both equities and commodities. It would also be more bearish than bullish for bonds, particularly long-dated government issues of countries experiencing more inflation than real economic growth.

Lastly, there are additional environmental risks during a global growth supercycle but also the capital to mitigate them.