Skip to content

CONTRIBUTORS

Kim Catechis

Investment Strategist, 
Franklin Templeton Institute

Preview

A version of this article, authored by Kim Catechis, Investment Strategist at Franklin Templeton Investment Institute, first appeared in The Bulletin: Demographics and long-term growth. OMFIF, Summer 2023.

Demographics as a driver of economic growth

Conventional wisdom points to young demographics as a driver of economic growth. The thesis is that young populations indicate a growing labor force, suggesting productivity gains long into the future. The reality is more complicated.

Having a lot of young people is clearly good, but they need to be healthy enough to work and able to learn appropriate skills for the labor market. We don’t need millions of Ph.D.s, but rather, a relatively well-educated pool of young people, because they are more easily employable. Given the trend toward automation and artificial intelligence (AI), the growth of the “knowledge” economy drives demand for skilled workers. A young, well- educated labor force will attract investment in high-margin, productive areas, providing the positive driver for economic growth.

The countries that have driven global economic growth in the last generation are those with aging populations, which likely will result in slower economic growth in the future. Even though many individuals are working beyond the typical retirement age, working age-populations are shrinking.  As the pension-age cohort increases, governments will try to find solutions to the anticipated slowdown in economic growth.

WHAT ARE THE RISKS?

All investments involve risks, including possible loss of principal. The value of investments can go down as well as up, and investors may not get back the full amount invested. 

This material is provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice. This material is general in nature and is not directed to any category of investors and should not be regarded as individualised, a recommendation, investment advice or a suggestion to engage in or refrain from any investment-related course of action. All information is current as of the date of this material and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm or the firm as a whole. Franklin Templeton does not accept any responsibility to update any opinions or other information contained in this document. This material may include estimates, outlooks, projections and other ‘forward-looking statements’. Due to a variety of factors, actual events may differ significantly from those presented.

IMPORTANT LEGAL INFORMATION

This material is intended to be of general interest only and should not be construed as individual investment advice or a recommendation or solicitation to buy, sell or hold any security or to adopt any investment strategy. It does not constitute legal or tax advice.

The views expressed are those of the investment manager and the comments, opinions and analyses are rendered as at publication date and may change without notice. The information provided in this material is not intended as a complete analysis of every material fact regarding any country, region or market. All investments involve risks, including possible loss of principal.

Data from third party sources may have been used in the preparation of this material and Franklin Templeton ("FT") has not independently verified, validated or audited such data. FT accepts no liability whatsoever for any loss arising from use of this information and reliance upon the comments opinions and analyses in the material is at the sole discretion of the user.

Products, services and information may not be available in all jurisdictions and are offered outside the U.S. by other FT affiliates and/or their distributors as local laws and regulation permits. Please consult your own financial professional or Franklin Templeton institutional contact for further information on availability of products and services in your jurisdiction.

Issued by Franklin Templeton Investment Management Limited (FTIML). Registered office: Cannon Place, 78 Cannon Street, London EC4N 6HL. FTIML is authorised and regulated by the Financial Conduct Authority.

Investments entail risks, the value of investments can go down as well as up and investors should be aware they might not get back the full value invested.

CFA® and Chartered Financial Analyst® are trademarks owned by CFA Institute.