Richard Jackson, adjunct fellow at the Center for Strategic and International Studies, has written a report for Citigroup Asset Management enitled "The Global Retirement Crisis".
He painted a picture of a world within just 20 years in which European economies had not grown for a decade and Japan, the world's largest debtor, has to ask the International Monetary Fund (IMF) for a bailout -- and is turned down by, yes, China.
"Global ageing threatens to bankrupt the developed countries, destabilise the global economy, and even overturn the geopolitical order," he told a seminar in Singapore.
"Within the next five to 10 years, the demographics will shift -- and the window of opportunity will close," he wrote. "Leaders need to act before it's too late."
The costs in public pensions and health care for the growing ranks of retirees will be immense.
According to his calculations, overall spending on public pensions is on track to practically double to 16 per cent of gross domestic product in the developed world by 2050.
The burden will be felt most in Japan, Italy, Germany and France. The rise there will begin as early as 2010 and climb rapidly for two to three decades.
Throw in health benefits for the elderly and the figure rises to an even more astonishing 23.4 per cent.
“Global ageing may also usher in an era of greater instability for world financial markets”, Jackson indicated.
“As retiring baby boomers begin cashing out assets, some economists predict that the markets will experience a great depreciation.
“At the same time, government borrowings to finance retirement benefits could wreak financial havoc, widening pension deficits could shatter regional economic and monetary unions like the EMU [European Monetary Union]”.
Technological progress in biotech could change this picture as a result of the development of rejuvenation therapies that could allow people to work many more years at high levels of productivity.
|Share |||By Randall Parker at 2002 December 05 01:19 AM Economics Demographic|