Emerging economies are set to grow faster than the developed economies over the next four decades and India is likely to become one of the three largest economies by 2050, says a PwC report.

According to the report 'World in 2050 The BRICs and Beyond: Prospects, challenges and opportunities', the global financial crisis has accelerated the shift of the economic centre of gravity and China is expected to surpass the US to become the largest economy in the world by 2050.

By the year 2050, China, the US and India are likely to be the three largest economies in that order, while Brazil could overtake Japan to be the fourth largest economy.

Turkey could emerge as one of the largest European economies, while Indonesia, Nigeria and Vietnam could climb the ladder strongly, the report said.

According to the report, in purchasing power parity (PPP) terms, the E7 could overtake the G7 before 2020; and by 2050 China, the US and India could be by far the largest economies – with a big gap to Brazil in fourth place, ahead of Japan.

And by the same time, Russia, Mexico and Indonesia could be bigger than Germany or the UK; Turkey could overtake Italy; and Nigeria could rise up the league table, as could Vietnam and South Africa in the longer term.

"The global financial crisis has hit the G7 much harder than the E7 in the short term. And it has also caused downward revisions in the estimates of longer term trend growth in the G7 – particularly those economies in Europe and the US that had previously relied on excessive public and private borrowing to drive growth," PwC Chief Economist and co-author of the report John Hawksworth said.

However, a number of potential sources of macroeconomic and political instability could challenge the growth prospects of the emerging market economies.

"The shift in the global economic centre of gravity is clear; but there are still major challenges for the emerging economies to sustain their recent strong growth," Hawksworth said.

For India and Brazil the challenges are high fiscal deficits; for Russia and Nigeria it is the over-reliance on oil and gas revenues.

Rising income inequality leading to social tensions is a cause of concern for China and other fast-growing economies, PwC said.

Hawksworth added that "there are huge opportunities for Western companies in the emerging markets –but also great competitive challenges from fast-growing emerging market companies."