Which countries have the absolute worst demographics? How can we use demographic indicators to forecast financial and political trouble? Learn more in our brand new Demographics Watch series!
Thanks for posting the problem index, I have not read the subsequent issues and so cannot comment accurately on the remainder of the research, but what you have set out makes a lot of sense, we know that:
- Countries in East Asia and most of Europe are ageing
- We know the dependency ratio, especially for old age is increasing
- State indebtedness to support this, together with lower rates of consumption, result in slower growing economies
- Having lived in Spain, Singapore and Japan, they are all dealing with things differently, but my question is, is this a problem or just a reality? - We can't continue to grow forever, dealing with the downside is key here. Additionally, how do local people feel about it, for example in Japan, locals would rather do menial jobs (including farming) rather than rely on immigrants (unless its a last resort), which increasingly it is. Additionally, some countries can attract immigrants, especially skilled ones, whilst others can't - Eastern Europe is not an attractive place for skilled workers from Asia for example.
On the contrary, in my index, places like Singapore, Japan and Spain are attractive places and if they want, they can have the labour force of their choice when they want it, but others, don't have that luxury - as an Indian immigrant, perhaps some thought needs to be taken on where we as skilled workers would be willing to move to and whether in future people will be willing to move as much.
Thanks for reporting on this important demographic issue. It is important and FinTwit and the financial press have been largely ignoring it.
It is my opinion that the retirement of the Boomer generation is at this point driving disinflation/inflation much more than supply chain issues.
If you model the economy as a closed island containing 100 people that trade shells for goods and services. If 20% of those people start saving a big chunk of their income by hiding shells, in the simplified model this will reduce the effective money supply and create a deflationary impulse. This was the regime up until 2017-ish.
Similarly, when that 20% of population stops working and starts trading their hidden shells for living expenses, this increases the effective money in circulation and will create an inflationary impulse.
When Powell says "higher for longer," I believe him and it's not just supply chain snarled inflation. This gigantic demographic shift will increase the inflation rate until the Boomer generation has finished divesting their inventory of shells. The neutral interest rate must be higher than whatever level the Boomers drive the inflation rate to.
Interesting article, however in Poland case You have not taken in concideration 5 mln of Ukrainian refugees Poland took in 2022. Some of them will stay and most of them are young women and children so it might compensate for aging population and change your numbers a bit.
I would agree that Western Europe is managing migration much better, if it is down to the numbers and statistics then East and South. On the other hand most of the migrants in the West are from completely different cultures and it may bring different problems in the future.
So I understand this as a clear message for a Danish follower. Buy and hold Real-estate as previous generations have also done and made huge returns, maybe not right now, but in general a good long-term advice, as we in Denmark can expect lower than 0% real-rates for decades to come.
Background:
1. Mid-south Europe is F***ed demographically and EU shares 1 central bank = relatively low rates in EU.
2. Danish industries are generally considered attractive for foreign investment (which makes Danish Crowns popular)
3. Denmark has a trade surplus driven by a number of large corporates and Med-Tec.
4. Denmark has its own central bank, however interest rates are based on maintaining a fixed-exchange rate to the EUR, not Denmark's own CPI.
It’s a fair point to look at this to compare countries. However, calling it a “problem index” is a bit blunt. Changing demographics are only a “problem” if you believe that everything has to keep growing forever at the same rates as it used to during the recent population explosion of the past 50 years. That doesn’t need to happen. We will need to adjust to demographic changes, but it’s not necessary to double world population every 50 years for us to feel good or make progress as a species.
Thanks for posting the problem index, I have not read the subsequent issues and so cannot comment accurately on the remainder of the research, but what you have set out makes a lot of sense, we know that:
- Countries in East Asia and most of Europe are ageing
- We know the dependency ratio, especially for old age is increasing
- State indebtedness to support this, together with lower rates of consumption, result in slower growing economies
- Having lived in Spain, Singapore and Japan, they are all dealing with things differently, but my question is, is this a problem or just a reality? - We can't continue to grow forever, dealing with the downside is key here. Additionally, how do local people feel about it, for example in Japan, locals would rather do menial jobs (including farming) rather than rely on immigrants (unless its a last resort), which increasingly it is. Additionally, some countries can attract immigrants, especially skilled ones, whilst others can't - Eastern Europe is not an attractive place for skilled workers from Asia for example.
On the contrary, in my index, places like Singapore, Japan and Spain are attractive places and if they want, they can have the labour force of their choice when they want it, but others, don't have that luxury - as an Indian immigrant, perhaps some thought needs to be taken on where we as skilled workers would be willing to move to and whether in future people will be willing to move as much.
Thanks for reporting on this important demographic issue. It is important and FinTwit and the financial press have been largely ignoring it.
It is my opinion that the retirement of the Boomer generation is at this point driving disinflation/inflation much more than supply chain issues.
If you model the economy as a closed island containing 100 people that trade shells for goods and services. If 20% of those people start saving a big chunk of their income by hiding shells, in the simplified model this will reduce the effective money supply and create a deflationary impulse. This was the regime up until 2017-ish.
Similarly, when that 20% of population stops working and starts trading their hidden shells for living expenses, this increases the effective money in circulation and will create an inflationary impulse.
When Powell says "higher for longer," I believe him and it's not just supply chain snarled inflation. This gigantic demographic shift will increase the inflation rate until the Boomer generation has finished divesting their inventory of shells. The neutral interest rate must be higher than whatever level the Boomers drive the inflation rate to.
Interesting article, however in Poland case You have not taken in concideration 5 mln of Ukrainian refugees Poland took in 2022. Some of them will stay and most of them are young women and children so it might compensate for aging population and change your numbers a bit.
I would agree that Western Europe is managing migration much better, if it is down to the numbers and statistics then East and South. On the other hand most of the migrants in the West are from completely different cultures and it may bring different problems in the future.
So I understand this as a clear message for a Danish follower. Buy and hold Real-estate as previous generations have also done and made huge returns, maybe not right now, but in general a good long-term advice, as we in Denmark can expect lower than 0% real-rates for decades to come.
Background:
1. Mid-south Europe is F***ed demographically and EU shares 1 central bank = relatively low rates in EU.
2. Danish industries are generally considered attractive for foreign investment (which makes Danish Crowns popular)
3. Denmark has a trade surplus driven by a number of large corporates and Med-Tec.
4. Denmark has its own central bank, however interest rates are based on maintaining a fixed-exchange rate to the EUR, not Denmark's own CPI.
Am I wrong?
It’s a fair point to look at this to compare countries. However, calling it a “problem index” is a bit blunt. Changing demographics are only a “problem” if you believe that everything has to keep growing forever at the same rates as it used to during the recent population explosion of the past 50 years. That doesn’t need to happen. We will need to adjust to demographic changes, but it’s not necessary to double world population every 50 years for us to feel good or make progress as a species.