By 2025 the economy of the Asia Pacific region will be bigger than North America and Western and Central Europe combined, IBISWorld Founder and Chairman, Phil Ruthven has told a CEDA audience in Newcastle.
In 2012 Asia Pacific represented 29.7 per cent of the world's economy, compared with 22.5 per cent in North America and 20.7 per cent in Western and Central Europe, he said.
"By 2025, our region will be bigger than both of them combined," he said.
"The pecking order is starting to shift quite dramatically."
In sheer economic output China will overtake the US and be number one by 2016, he said.
"We're three years away from a change of power, for the first time in something like 90 years," he said.
"However, the standard of living in China will be very much lower than the United States for a long, long time."
Mr Ruthven said Australia is sitting comfortably ranking as the 17th largest economy but only 52nd based on population size.
Australia's net debt is quite low and for anybody to suggest that Australia is in trouble would be simply talking rubbish, he said.
"The problem with our debts is not that it's very high at all, in fact it's one of the lowest in the world," he said.
"It's the direction that we're going in, not the absolute level of debt.
"In other words, we've been in a habit for six years of running deficits, and if we run it for another 10 years then you're heading for the same sort of problems that Europe have gone into over the last 20 or 30 years.
"We're still a very, very safe country.
"(But) I really hope that despite all the promises made, that we do have a proper taxation reform agenda coming up after this election."
On the issue of what Australia needs post-mining boom, Mr Ruthven said we will be able to fill the gap left behind by mining, which in the financial year 2012 represented 25 per cent of capital expenditure in the Australian economy.
"But it is going to mean new infrastructure in many cases," he said.
Service sectors such as tourism, education and health will play a much larger role in Australia's future with the economy's industry mix changing, as it has in the past, he said.
"Agriculture and mining are not as dominant as they once were," he said.
These were taken over by manufacturing in the industrial age but they are now being taken over by the service industries, he said.
"Manufacturing is going the same way as many other industries, which we loved dearly at the time but it won't matter that they've gone except in an emotional sense," he said.
In Newcastle, manufacturing now represents nine per cent of employment where it was once 35 per cent, he said.
Mr Ruthven said the change in Newcastle's economic mix, with a higher portion of jobs in the services sector than the Australian average, makes it a very modern economy.
"In a sense, Newcastle is superbly well-placed by any world standard of where your jobs should be to be really an advanced economy," he said.
"You have an even higher proportion of jobs in the service industries than Australia as a national group."
On Australia's future economic prosperity, Mr Ruthven predicts that tourism will be the single biggest export from Australia by 2025.
Mr Ruthven also predicted that after the Australian dollar falls to 82c against the US dollar it would again rise back to $1.10 by 2020 due to US asset values regaining their strength and subsequently causing inflation in the US.
We'll have relief in the next three years and it will then start to climb again, he said.
"Services will dominate our export trade by the end of the next decade," he said.
In the year to March 2013 Australians spent only 21.5 per cent of their household income on goods like cars, TVs, food and clothing, he said.
"Retail sales are so small they're no longer an indicator at all of where the economy is going," he said.
"Now virtually almost all of what we spend our money on is services, not goods and that's going to be even more so in the future."