The Great Demographic Reversal: Ageing Societies, Waning Inequality, and an Inflation Revival

by Charles Goodhart

Most worryingly, it is not just the share of global GDP that the ageing economies dominate, they also account for the lion’s share of global growth over the last 15 years. If we extend that timeline over the last 35 years, the picture does not change appreciably. The danger facing the global economy is precisely that the economies that have dominated global growth are facing the biggest demographic challenges. And that means even if the world as a whole still faces substantial population growth going forward, the economies that shaped global growth for the last 35 years are the ones which bear the brunt of the demographic headwinds . Put differently, if demography is to leave only a scar on the global economy, then the economies that have done very little for global growth in the past few decades are the ones that must do much, much more in the future. Seen from this perspective, it should be clear that the disruption from technology that many fear so much in the advanced economies is actually an imperative without which the damage to global growth could well be far worse.