Executive Briefings

Research Says Global GDP Growth Rate May Drop Almost 40 Percent Over Next 50 Years

For the last 50 years, the world economy has benefited from a demographic boom that has contributed 1.8 percent to average annual global GDP increases, helping to generate an unprecedented level of growth. This demographic headwind is coming to an end.

Research Says Global GDP Growth Rate May Drop Almost 40 Percent Over Next 50 Years

With populations aging and fertility rates dropping around the world, the growth rates of the past 50 years may prove to be the exception, not the rule. The latest research of the McKinsey Global Institute suggests that unless increases in labor productivity compensate for an aging workforce, the next 50 years will see a nearly 40 percent drop in GDP growth rates and a roughly 20 percent drop in the growth rate of per capita income around the world.

The potential for diminished growth varies considerably among countries. In the developed world, Canada and Germany are poised for the biggest drops in GDP growth rates. Saudi Arabia, Mexico, Russia and Brazil are most at risk in developing countries. Societies that fail to raise their game for the productivity needed to sustain growth will find it harder to achieve a host of desirable goals, such as reducing poverty in developing economies and meeting current social commitments in developed ones.

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With populations aging and fertility rates dropping around the world, the growth rates of the past 50 years may prove to be the exception, not the rule. The latest research of the McKinsey Global Institute suggests that unless increases in labor productivity compensate for an aging workforce, the next 50 years will see a nearly 40 percent drop in GDP growth rates and a roughly 20 percent drop in the growth rate of per capita income around the world.

The potential for diminished growth varies considerably among countries. In the developed world, Canada and Germany are poised for the biggest drops in GDP growth rates. Saudi Arabia, Mexico, Russia and Brazil are most at risk in developing countries. Societies that fail to raise their game for the productivity needed to sustain growth will find it harder to achieve a host of desirable goals, such as reducing poverty in developing economies and meeting current social commitments in developed ones.

Read Full Article

Research Says Global GDP Growth Rate May Drop Almost 40 Percent Over Next 50 Years