Suicide by Demography Part I

Article of Jan Longeval – Senior Advisor at Eurinvest Partners

Quo Vadis is Eurinvest Partners’ new Economic and Financial Newsletter, written by our Senior Advisor Jan Longeval. On the basis of in-depth and independent research, it aims to shed light on some of the world’s most important economic , financial and geopolitical themes.

 Executive Summary

• Economic growth is driven by 2 factors and 2 factors alone: labour force growth and productivity growth.
• Demographic shifts have major economic consequences and shift the global balance of power.
• Contrary to popular belief, much of the world faces a problem of underpopulation, not overpopulation.
• World population will continue to grow until the middle of the 21st century, but growth is driven by sub-Saharan Africa. In most other parts of the world, the situation is radically different. The working-age population there has started a steady decline, putting a major brake on global economic growth in the coming decades.
• The ageing population will also put pressure on public finances. An expanding public debt will reduce productivity gains, further reducing economic growth.
• Global economic growth is in a downward spiral. There is no way back unless fertility rates rise again, which is highly unlikely.
• The long-term demographic and economic outlook for Europe, southern Europe in particular, Japan and many other developed and developing countries is dramatic. In China, the outlook is downright catastrophic.
• Slow global economic growth and low commodity prices will structurally lower global inflation.
• The implications for investors are huge.

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