by Franklin Templeton Institute’s Kim Catechis.
Introduction
In our “Deep Water Waves” publication, we identified several powerful, connected and long-duration factors that will have a significant impact on investment returns over the next decades. One of these is the Demographic Wave. Its impact is a distinct aging of the populations of some countries and high fertility rates and young populations in others. Those countries that have been driving global economic growth over the last generation are aging fast, creating productivity challenges. Those with young populations are almost invariably struggling to create jobs and give themselves a chance to benefit from their youthful population. This mismatch serves to exacerbate the impact of a combination of social, economic, geopolitical and governance pressures.
This paper is a derivative of “Deep Water Waves” and identifies the economic, political and investment implications for countries in each of the four stages of the demographic dividend. It uses the analysis of the structural positioning of 110 countries (covered by our proprietary Country Risk Framework) to outline potential policy direction and the signposts for investors to watch for. Growing demand for credit and a more constrained access to financing will play defining roles, along with the impact of climate change in the next 20 years.
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