The end of constant economic growth

Economic growth

SHARE THIS STORY

Youtube Oct13You can’t turn 55-year-olds back into 30-year-olds.  That, in a nutshell, is why today’s globally ageing populations are creating major changes in demand patterns.

Household consumption is more than 60% of GDP in all developed countries, and also the key driver for future growth in emerging economies.  So the rise of the New Old 55+ generation, alongside the dramatic drop in the number of babies being born, is creating an unprecedented paradigm shift in the global economy.

The key starting point is the way global life expectancy has increased by 50% over the past 50 years, whilst global fertility rates have halved.   The average person can now expect to live to 70 instead of 47, whilst each woman has just 2.5 babies.  Dramatic change is thus underway in demand patterns as a result:

  • The post-War Western BabyBoomers were the largest and wealthiest generation in history
  • They drove a 25-year economic SuperCycle between 1983-2007 as they entered their Wealth Creator years
  • They are now entering their low-spending and low-earning years as they retire and join the New Old generation
  • Today’s Western Wealth Creators aged between 25 – 54 years are a much smaller generation.  Their spending power therefore can’t compensate for the decline in New Old consumption
  • The future Wealth Creators being born today are an even smaller generation in the West and in the emerging economies, where women are also now choosing to have fewer babies

Is your company now finalising its budget for 2014-16?  Has it factored this paradigm shift into its thinking?  Or is it still working with forecasts of a return to constant growth based on hope rather than experience?

In 5 and 10 years time, people will likely look back in amazement at the idea one could forecast demand by relation to IMF forecasts of GDP.  They will believe it is just common sense to instead focus on age range and income levels.

Companies that don’t focus on this paradigm shift will face tough times, as they wait for a recovery that never comes.

The blog’s new article for ICIS Chemical Business highlights the opportunities and risks ahead.

Please, take a moment to download it and circulate it to your colleagues.  Debating these issues may well be the most important thing your company does all year.

FREE DOWNLOADS
Click here to download the new article, The End of Constant Growth
Click here to view the ICIS interview with Paul Hodges

PREVIOUS POST

Recovery has been delayed, again

14/10/2013

You can’t turn 55-year-olds back into 30-year-olds.  That, in a nutshell, is ...

Learn more
NEXT POST

High-frequency trading continues to take markets higher

16/10/2013

You can’t turn 55-year-olds back into 30-year-olds.  That, in a nutshell, is ...

Learn more
More posts
The End of “Business as Usual”
21/04/2019

In my interview for Real Vision earlier this month, (where the world’s most successful invest...

Read
Most businesses were nowhere near Ready for Brexit last Friday – we mustn’t make the same mistake again
14/04/2019

Thank goodness for backbench MPs and the European Union. Without their efforts, the UK would by now ...

Read
Don’t get carried away by Beijing’s stimulus
07/04/2019

Residential construction work in Qingdao, China. Government stimulus is unlikely to deliver the econ...

Read
Businesses thrilled by Brexit uncertainty: “It’s exhilarating” says small business owner
01/04/2019

With the European Commission saying that a No Deal is now “likely“, small businesses acr...

Read
Ageing Perennials set to negate central bank stimulus as recession approaches
10/03/2019

The world’s best leading indicator for the global economy is still firmly signalling recession...

Read
BASF prepares its UK supply chain for Brexit
24/02/2019

BASF has been working with Ready for Brexit (the online platform I co-founded last year) as part of ...

Read
Companies and investors have just 30 working days left to prepare for a No Deal Brexit
17/02/2019

Companies across the UK and EU27 are suddenly realising there are now just 30 working days until the...

Read
The BoE’s pre-emptive strike is not without risk
12/02/2019

The Financial Times has kindly printed my letter below, arguing that it seems the default answer to ...

Read

Market Intelligence

ICIS provides market intelligence that help businesses in the energy, petrochemical and fertilizer industries.

Learn more

Analytics

Across the globe, ICIS consultants provide detailed analysis and forecasting for the petrochemical, energy and fertilizer markets.

Learn more

Specialist Services

Find out more about how our specialist consulting services, events, conferences and training courses can help your teams.

Learn more

ICIS Insight

From our news service to our thought-leadership content, ICIS experts bring you the latest news and insight, when you need it.

Learn more