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Ageing populations mean decades of slower growth

Economic growth
By Paul Hodges on 30-Oct-2012

G7 in 2012.pngThe next few decades will see very much slower economic growth in most countries. This will have critical implications for business strategy, as the blog summarises in a new Research Note. Encouragingly, the Financial Tmes has devoted a column to its argument, focusing on the implications for the UK.

The Research challenges the current consensus view that growth is inevitably constant as long as the policy mix is correct:

• It highlights how the Western BabyBoom led to an extra 33m babies being born between 1946-70, equal to Canada’s current population
• Using US and UK government data, it then shows how this led to a growth SuperCycle as these Boomers came into their peak consumption period between 25-54 years
• However, as the chart shows, since 2001 the Boomers have been moving into the 55+ age group, when household spending starts to fall away quite rapidly
• Essentially, the Boomers no longer need to buy so many new products, but instead require only replacement items, which can be deferred if necessary
• It also makes a link with Japan, where the Governor of the Bank of Japan is very concerned that the world is sleepwalking into the same issues that have impacted its economy over the past 2 decades

Tomorrow, the blog will highlight the key implications of these changes for Company Boards and senior executives.