Getting old disgracefully?

Changing demographics and the risk to the world economy - Is this a west-centric view, and what does the Asian picture look like?

Ian Ling – speaking about demographics at the Ashburton investors’ conference recently – says that falling interest rates are the biggest contributor to the pension deficits in the USA, which rely on increasing interest rates and improving stock markets.

Angelo Coppola reports...

He says that the world’s population is getting older and this is adding undue pressure to the world’s economy, which is already suffering, and just coming out of a flat to negative growth rate.

Essentially there is a shrinking army of workers who have to support an increasing number of pensioners. And its particularly bad in certain parts of Europe, like Italy and Spain.

He suggests that immigration could be a solution in Europe, as the US has done. Other options include postponing retirement dates, scaling back pensions, raising productivity or increasing fertility?

In Asia, demographics are dominated by China and India, and the two countries contribute more than 35% of the world’s population, while the region is one decade behind the demographics of the West, and thus in a better position than their western compatriots.

Ling predicts that China and India will dwarf the rest of the world up until 2050, in terms of GDP growth, while Europe will plod along in the slow lane and the USA will grow moderately.