Reuters blog archive

from Breakingviews:

Age shifts weaken global economy’s shock absorbers

By Andy Mukherjee

The author is a Reuters Breakingviews columnist.  The opinions expressed are his own.

The world economy has become more fragile. And it’s not just that the stimulus-driven recovery from the 2008 crisis has been anaemic and incomplete. Another worrying trend is the shift in the age structure of the global population which may have eroded some of the crucial shock absorbers.

To see the connection between demographics and economic fragility, consider the ratio of middle-aged people – those aged between 45 and 54 years – to the young who are still in their twenties.

For the world as a whole, this ratio has shot up from 0.48 in 1990 to 0.65 in 2010, and will climb to 0.85 in 2035, according to the United Nations’ population projections. In the developed world, the number of middle-aged overtook the number of young in 2005, and the ratio won’t start declining until after 2025.

from The Great Debate:

Iran: More than Persia

When Iranian President Hassan Rouhani was campaigning, he promised the country’s many ethnic minorities to expand the use of their languages. Rouhani recently signaled his intent to keep that promise, by appointing Iran’s first presidential aid for ethnic and religious minority affairs, acknowledging the country’s minority challenges.

In the multi-ethnic state that is Iran, the political meaning of the population’s diversity will have serious consequences as political normalization with the West continues. Both the United States and the European Union should understand the significance of Iran’s multi-ethnic makeup and prepare policies that can address it.

from Global Investing:

Russia’s people problem

President Vladimir Putin is generally fond of blaming the West for the ills besetting Russia. This week though, he admitted in his State of the Nation speech that the roots of Russia's sluggish economy may lie at home rather than abroad.  The government expects the economy to expand a measly 1.4 percent this year (less than half of the growth the US is likely to see) and long-term growth estimates have been trimmed to 2.5 percent a year.

Much of that is down to the lack of reform which has left many big companies in the state's (generally wasteful) hands, weak rule of law that deters investment and capital flight to the tune of tens of billions of dollars a year. Yet there is another factor that could be harder to fix -- Russia's poor demographic profile. The population started declining sharply in the early 1990s amid political and economic turmoil, falling by 3.4 million in the 2000-2010 decade, according to census data. The impact is set to be felt sharply from now on, exactly when children born in 1990s would have started entering the workforce.

from Breakingviews:

The lessons for China from Japan’s lost decade

By Andy Mukherjee

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Is China condemned to suffer a Japanese “lost decade”? Its economy today has three big similarities with Japan in the late 1980s: High and rising debt, diminishing export competitiveness and an ageing society. China can avoid slipping into Japan’s deflationary hole, but only if it learns from Tokyo’s failure to cleanse its banking system.

from MacroScope:

For workers, the long run has arrived in Latin America

The outlook for emerging market economies over the next decade looks more challenging as long-term interest rates start to bottom out in the United States. Here is another complicating factor: ageing populations.

That problem is not as serious as in Japan or Europe, of course. Still, investors probably need to cut down their expectations for economic growth in Latin America over the next years, according to a report by BNP Paribas.

from Breakingviews:

Two-child policy may be too late for China

By Robyn Mak

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

China needs more babies to counter its ageing population and shrinking workforce. But relaxing the country’s one-child rule may not be enough to convince increasingly prosperous Chinese women to have more children. Even if effective, the shift would only have a marginal impact on the economy.

from Breakingviews:

Welcome to another year of the Great Stagnation

By Edward Hadas

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Remember the Great Moderation? Before the financial crisis, economists thought they had found the recipe for steady GDP growth from here to eternity. But almost five years after a banking collapse and a Great Recession, recovery remains tepid in the world’s rich countries. It is the Great Stagnation.

from Breakingviews:

Abenomics can clear Japan’s demographic hurdle

By Andy Mukherjee

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Japan has a serious demographic disadvantage: its population is both shrinking and ageing. But the situation is not so dismal - at least not yet - that it will wreck Prime Minister Shinzo Abe’s plans to revive the economy.

from Breakingviews:

Singapore’s demographic engineering on right track

By Andy Mukherjee

The author is a Reuters Breakingviews columnist.  The opinions expressed are his own.

Singapore’s audacious proposal to squeeze 30 percent more residents on a tiny island between now and 2030 is fraught with political risks for the ruling party. Voters won’t like it. But it’s prudent economics.

from Nicholas Wapshott:

Is conservativism going extinct?

There was so much cacophony at the Republican National Convention in Tampa this summer that some unscripted remarks were not given the prominence they deserved. One of the most prescient, in light of Mitt Romney’s defeat, was this from South Carolina Senator Lindsey Graham: “We’re not generating enough angry white guys to stay in business for the long term.” Graham’s bleak demographic assessment of the conservative future was confirmed by David Bositis, of the Joint Center for Political and Economic Studies, whose harsh verdict was that the “Republican Party base is white, aging and dying off.”

Has the GOP really become a redoubt for “angry white guys”? Will Republicans put themselves out of business by not appealing fast enough to young voters? To put it at its most stark: Are conservatives going extinct? Graham’s view was echoed this past weekend by the Republican sage George Will. Pondering whether the Supreme Court will declare gay marriage legal, he said, “There is something like an emerging consensus. Quite literally, the opposition to gay marriage is dying. It’s old people.”