Global Economic Trends: Insights on Interest Rates and Ageing Populations"?
Explore key global economic trends including falling interest rates, ageing populations, rising dependency ratios, and shifting economic models. China's integration into the global economy, changing inequality patterns, and the impact of ageing on deficits and borrowing are discussed. Gain insight into future challenges and opportunities in the evolving economic landscape.
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Presentation Transcript
Figure 2: Working age populations falling globally Africa is the key exception, and India to a lesser extent 3
Table 1: Dependency ratios rising because of the elderly, not the young 4
Figure 3: The dependency ratio is rising in the AEs and EME giants except India 5
China A Historic Mobilization Ends China s integration in the global economy: WTO accession, internal migration, financial repression of households to subsidize SOEs Today: Labour: China is past the Lewis Point Capital: Inflow of companies, and hence technology, is harder Economic model and external environment have been transformed The Result? China is no longer a global disinflationary force Falling savings (due to ageing) will push the current account into deficit Technological change will have to be generated at home. 6
Table 2: Inequality has narrowed across countries, particularly the EMEs Ratio of the wages of the workers 7
Figure 6: Within-country inequality has risen over the last 30 years 10
Figure 7: Ageing will lead to a massive rise in deficits and borrowing 12
Figure 8: US federal debt outstanding is project to skyrocket, mostly due to ageing 13
Mitigants Africa/India Limit benefits to old More participation of elderly Technology 14
Figure 9: Why Didnt It Happen in Japan? 15
Conclusions Inflation is coming and the coronavirus will accelerate its arrival The interest rate yield curve will steepen Asset returns will be harder to extract The combination will lead to lower within- country inequality The Debt Trap will have to be dealt with Higher taxes will finance age-related spending o Corporations o Land (Henry George) o Carbon Central bank independence will come under increasing threat 18
