PERSPECTIVE3-5 min to read

D-cipher video series: Demographics explained

Welcome back to D-cipher, the video series to help you understand the 3D Reset. Today, we’ll delve a little deeper into demographics.

01/11/2023
3D reset / Regime Shift

Authors

Adam Farstrup
Head of Multi-Asset, Americas

Today we are exploring the impact of demographic changes on the global economy. Forecasters predict that global population growth will decline and labor force growth will slow over the coming decade, reducing the number of available employees and pressuring employers as they compete for talent. This scarcity of workers will have a huge impact on inflation and economic growth as wages rise.

Projections show populations in major economies and regions getting older, leaving fewer people of working age. The labor force participation rate has fallen both in the U.S. and the U.K. since the pandemic began. The number of workers in the eurozone, Japan and China will also decline. With fewer workers, businesses should expect to pay more in salaries and for investments in productivity-boosting technologies, aggravating inflation. And businesses won’t be able to offset these costs as easily through offshoring and migration, as globalization is challenged.

Demographic shifts will create opportunities and pitfalls and meeting the coming challenges will require a different mindset. Businesses will look to technology such as robotics and AI to boost productivity and adapt to a more constrained labor market.  Companies that successfully navigate these changes and adapt quickly will emerge well-positioned for the new world. Similarly, investors who adjust their approach and can identify these successful businesses may be better positioned to weather the coming transition.

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Authors

Adam Farstrup
Head of Multi-Asset, Americas

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