Shades of grey: how demographics influence growth and inflation
What is the impact of ageing populations on global growth and inflation, particularly in the US?
Historically, American consumers used debt to maintain consumption, even as growth rates started to slow. This trend has been stopped in its tracks by an ageing population saving for retirement. In addition, debt levels appear to have reached a ceiling relative to gross domestic product (GDP), bringing to an end what has been called the debt super-cycle, and this has further constrained growth. US consumption has benefited China and other Asian emerging markets, as they have been able to use their labour forces to industrialise, initially by exporting cheap goods to the West. The unwritten understanding was that these Asian powerhouses would then take over the role as the lead global consumer. However, China itself has one of the fastest-ageing populations globally, owing to its one-child policy. China, Europe and Japan make up 42.5% of global GDP, and these countries have the worst demographic profiles. The IMF also comments on further means to enhance productivity. New technologie...
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