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The composition of spending changes as consumers age, with a greater proportion allocated to healthcare, food and drink, and less to education, transport and recreation. The experience of countries that have already aged significantly, such as Japan, …
1st August 2022
US equities have plunged this year, but the S&P 500’s valuation remains a long way from looking low on most measures, including Shiller’s CAPE. This is a key reason why we expect the returns from US equities over the next decade or so to fall well short …
25th July 2022
Ageing populations will be one of the main structural challenges facing many economies over the coming decades. Ahead of a series of work analysing what can be learned from countries ageing rapidly, this Update starts by looking at which those are. The …
14th July 2022
The UN’s latest population projections highlight that demographic headwinds are set to mount in almost all economies outside Africa. The most significant downward revisions were to its forecasts for China, but we still think that the ultimate decline in …
13th July 2022
At the recent ECB’s annual forum, the world’s top central bankers argued that a return to a world of low inflation was unlikely. It is true that sustained undershoots of inflation targets are probably a thing of the past. However, policymakers’ renewed …
8th July 2022
While the current rise in inflation to near double-digit rates is clearly undesirable, it begs the question of at what point the costs of sustained higher inflation outweigh the benefits. We think that the tipping point is around 5%. This suggests that it …
30th June 2022
It is still too early to assess the lasting impact of the pandemic on productivity in developed economies. But we remain optimistic that the legacy could be a positive one. Productivity growth, in terms of output per worker, has swung about over the past …
24th June 2022
Despite the sharp fall in the US stock market this year so far, US equities still appear much more highly valued than their peers in the rest of the world. While that might not tell us much about the outlook for relative returns in the near term, …
10th June 2022
A falling fertility rate and declining employment among retirement age workers pose downside risks to our long-term forecasts for Japan’s labour force and GDP growth. However, with the female participation rate still climbing from record highs and job …
7th June 2022
Download the PDF for the full report Our Long Run Returns Monitor provides our updated long-term projected returns for major asset classes, as well as a summary of the macroeconomic forecasts which underpin them. All projections in this publication are as …
12th May 2022
One benefit of the current rise in inflation, at least for governments, is that it is eroding the real value of public sector debt. But this will reverse only a small part of the pandemic-related rise in government debt ratios in DMs. And the impact on …
10th May 2022
We argued two years ago that the pandemic would accelerate changes that were already underway rather than trigger behavioural changes out of the blue. Now that most restrictions have been removed in advanced economies, spending on services and recreation …
6th May 2022
Substantial fiscal support helped to prevent a big rise in income inequality within developed economies during the pandemic. But inequality was rising in many DMs before then and could revert to that trend if technological advances disproportionately …
3rd May 2022
The valuations of mid- and large-cap equities in Japan have become even more attractive compared to those of their US counterparts following a further period of substantial underperformance in common-currency terms. That may bode well for their relative …
12th April 2022
The main long-run economic impact of the Ukrainian refugee crisis will be to boost the workforce of countries where the migrants settle, partially offsetting the unfavourable demographics that many of these areas face. According to the UN, some 10m …
29th March 2022
Claims that the war in Ukraine will prove to be a watershed moment that ends the dollar’s position at the heart of the global financial system are wide of the mark. It could accelerate the development of smaller trading blocs that use alternative …
23rd March 2022
Their net fall since the invasion of Ukraine means the valuations of European equities are now even lower relative to those of US stocks. While valuations have a mixed track record at predicting returns over short periods, they are key to our view that …
17th March 2022
It is highly likely that the war in Ukraine will accelerate Russia’s shift towards isolation and into autarky. (See here .) This will prevent Russia from catching up with more advanced economies, while the West will face some difficult choices as higher …
10th March 2022
One immediate effect of the war in Ukraine will be to push Russia several places down the league table of the world’s largest economies. However, the impact on the global economy over the long run will depend to a large extent on its political and …
2nd March 2022
Although the Fed is poised to step on the brakes to tackle the highest rate of inflation in four decades, we don’t expect the yields of US equities and Treasuries to rise to anywhere near their peaks in 1982 after the central bank jacked up rates. …
18th February 2022
Recent developments have supported our view that the pandemic will not do much permanent damage to the level of GDP in most countries, especially developed markets. Nonetheless, it will accelerate some of the structural trends that were already set to …
10th February 2022
We expect governments in advanced economies to take action to prevent public sector debt ratios from spiralling out of control as their populations age. However, this is uncertain, and the risk is some countries will end up on an unsustainable debt …
28th January 2022
Ahead of publishing our latest Long-Term Outlook next month, this Update sets out the assumptions we have made in our long term forecasts about both climate change and the efforts to prevent it. There is still huge uncertainty about whether countries will …
13th January 2022
The continued threat of new virus waves, and therefore fresh rounds of travel restrictions, suggests that global migration flows could remain subdued for a while yet. However, we continue to doubt that the pandemic will have any major lasting impact on …
16th December 2021
One possible upside of the current labour market shortages in developed economies is that they could push firms towards expanding output by raising investment and productivity instead of relying on cheap labour. However, any gains in productivity may not …
2nd December 2021
Download the PDF for the full report Our monthly Long Run Returns Monitor provides our updated long-term projected returns for major asset classes, as well as a summary of the macroeconomic forecasts which underpin them. All projections in this …
25th November 2021
The pandemic’s most significant economic legacy in India will be a heavily-damaged banking sector that is likely to constrain investment over the years ahead. This underpins our view that the economy could be 5% smaller over the long run than it would …
17th November 2021
COP26 has progressed efforts to fight climate change, but there is still a significant gap between pledges and actual policies. Unless action ramps up this decade, countries may face a choice between accepting the costs of greater global warming or a …
16th November 2021
The UN’s annual climate change conference, COP26, has the potential to be an important milestone but it is just one step along the path required to limit global warming. Accordingly, it will not on its own stop climate change from clouding the long-run …
2nd November 2021
22nd October 2021
Accelerated adoption of renewable electricity will cause demand and prices of coal and natural gas to fall over the long run. While we think the global economy will handle this transition well, there will be some winners and losers depending on which …
15th October 2021
It is a year since we published our “ Economies after COVID ” series, so now seems like a good time to pause and take stock of how our predictions about the legacy of the pandemic are shaping up. There is a still a long way to go until the pandemic’s full …
8th October 2021
Irrespective of how the current problems in China’s property sector are resolved, property construction there is entering a period of structural decline. Among other EMs, the main effects will be felt in metals producers in Latin America and Africa, …
7th October 2021
29th September 2021
While it may take years or decades before the evidence is clear, there are tentative signs that the pandemic has accelerated a shift towards a bigger role for the state in advanced economies. In our “ Economies after COVID ” series last year, we explained …
24th September 2021
The pandemic is likely to inflict lasting damage on potential growth in economies in much of Latin America, Africa and South and Southeast Asia, adding to the structural headwinds that they already faced. However, the risk of permanent scarring in many …
9th September 2021
Climate change is already making extreme weather events more frequent and more intense, which will worsen as the planet warms further. This is most likely to cause short-term disruptions to economic growth in some EMs. What’s more, it could result in more …
6th September 2021
Although the US stock market’s valuation is nearly as high now as it was at the height of dot com mania, we don’t expect the return from it to be as bad in the next decade as it was in the 2000s. To re-cap, the return from a stock market index is …
31st August 2021
Although we forecast the greenback will rise further over the next year or two, we think that it will face growing headwinds over the longer term. As we set out in our first FX Markets Valuation Monitor , we think that the dollar is somewhat overvalued …
26th August 2021
Download the PDF for the full report. Our monthly Long Run Returns Monitor provides our updated long-term projected returns for major asset classes, as well as a summary of the macroeconomic forecasts which underpin them. All projections in this …
24th August 2021
Many countries are increasingly well-placed to ‘live with COVID’ and will be able to avoid the need for occasional lockdowns. However, this requires reaching and maintaining a high level of immunity in the community and there is a risk that this will be …
11th August 2021
Download the PDF for the full report. While emerging market equities have generally struggled since the previous edition of our Long Run Returns Monitor was published, most other asset classes have fared reasonably well. Most notably, government bond …
30th July 2021
Birth rates have fallen in several advanced economies during the pandemic. Although we think that fertility rates will bounce back and there won’t be material long-term impacts, this presents a small downside risk to some of our long run forecasts for …
23rd July 2021
Recent methodological changes by the UK statistics body highlight the difficulties of capturing productivity improvements in official economic data. Although the revisions will make only a small improvement to the UK’s productivity picture, they support …
14th July 2021
We expect some major central banks to issue digital currencies later this decade, with those in countries where cash is rarest proceeding the fastest. The first generation of central bank digital currencies (CBDCs) will be purposely designed not to shake …
6th July 2021
Revisions to the historic data following the recent census show that China’s population barely grew last year and that employment is already contracting faster than previously understood, having peaked in 2014 rather than 2017. The silver-lining, however, …
1st July 2021
Download the pdf for the full report . Given that the moves in most financial markets since the previous edition of our Long Run Returns Monitor have been fairly small–at least for the period as a whole –the returns that we are projecting from most assets …
24th June 2021
Global migration has ground to a halt over the past year or so, but we doubt that the pandemic will have any major lasting impact. Moreover, there is potential for migration to get a fresh impetus from a big rise in the number of people leaving Africa …
15th June 2021
Emerging markets as a whole will increase their share of global GDP over the coming decades, with the largest expansions likely to come in EMs with rapid population growth (sub-Saharan Africa), those with manufacturing sectors that can drive productivity …
3rd June 2021
Our monthly Long Run Returns Monitor provides an updated set of projections for the returns from major asset classes over the next few decades. Given that the period since the previous edition of this document has been a fairly quiet one for financial …
27th May 2021
