Wednesday, March 08, 2006

Demographip trends show us the real emerging economies

This is quite interesting yet actually very logical. My offset is Russia and a small article from yesterday's Moscow Times. Citing a recent report from PricewaterhouseCoopers it presents the gist for us.

(the whole article is pasted below)

"Changes in the makeup of Russia's population are set take a heavy toll on the economy, according to a PricewaterhouseCoopers report released Monday.

"The impact of a declining, aging population is particularly significant in restricting Russia's ability to increase its share of world GDP in a similar way to other large emerging economies," the report said.

The consultancy projected that the combined gross domestic product of the so-called E7 group of leading emerging economies -- China, India, Brazil, Russia, Indonesia, Mexico and Turkey -- will become 25 percent larger than that of the Group of Seven industrialized heavyweights by 2050. The G7 includes the United States, Japan, Germany, Britain, France, Italy and Canada.

Russia's rapidly declining working-age population will cause its economy to grow at a significantly slower rate than that of its peers, according to PwC. India and Indonesia are in a better position than Russia, PwC said, because they are currently experiencing a small boom in their labor forces.

Russia, which is expected to undergo the worst demographic crisis among the E7 countries, is not expected to approach the size of France's economy until 2050, PwC said."

Essentially you don't have to go into the report, but I still think the conclusions are worth scrutinizing.

"(...) there are likely to be notable shifts in relative growth rates within the E7, driven by divergent demographic trends. In particular, both China and Russia are expected to experience significant declines in their working age populations between 2005 and 2050, in contrast to relatively younger countries such as India, Indonesia, Brazil, Turkey and Mexico, whose working age populations should on average show positive growth over this period, although they too will have begun to see the effects of ageing by the middle of the century."

Even at a short glance the report looks to be solid so I can highly recommend to read the charts and conclusions.

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