Dismal Demographics

Photo by Picsea on Unsplash

Slowing population growth across most of the world’s developed economies is an under-appreciated long-term headwind to economic growth. Long-term GDP growth is primarily a function of labor force growth (and thus population growth) and productivity growth (the efficiency at which an economy converts labor into economic output).

If population growth slows or even begins to decline, then immigration becomes even more key — if you can’t organically grow your labor force, then the next best thing is to import it. It will be interesting to see how this plays out over the coming years.

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