Declining population growth that shrinks the pool of available labor over the next 50 years will reduce by 40% the rate of growth in global economic output for the world’s 20 largest economies compared to the past 50 years, according to a new study. The report from the McKinsey Global Institute says that to compensate for the drop in the growth of the labor force, productivity needs to accelerate 80% from its historical rate to keep global growth in gross domestic product from slowing. Over the past 50 years, global growth increased six-fold, and average per capita income nearly tripled. McKinsey researchers estimate that around half the increase stemmed from gains in productivity and half from the growing labor force. Now, the workforce isn’t going to grow nearly as fast, and it could peak in most of the 20 countries analyzed in the report over the coming 50 years. Employment growth averaged 1.7% since 1964 and is set to drop to 0.3% in the coming decades. “In a world in which we can no longer rely on…the supply of labor to drive GDP growth, productivity is largely it,” says James Manyika of McKinsey & Co. Among the 20 nations studied, only Nigeria will see employment growth and GDP growth increase over the coming 50 years, based on recent demographic patterns, says McKinsey. (On a per capita basis, Turkey, Argentina and South Africa will see GDP growth increase.) Several nations will see outright declines in employment, including Japan, Germany, Russia, Italy and China. McKinsey sees GDP growth in the U.S. slowing by around one third, from an annual rate of 2.9% to 1.9%. blogs.wsj/economics/2015/01/14/declining-population-could-reduce-global-economic-growth-by-40/
Posted on: Mon, 19 Jan 2015 23:57:50 +0000
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