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17 Jun 2016

Global Market Metrics: What’s changed

Every once in a while it is important to stop and ask what’s going on/how did we get here?

If you look at global population data you will quickly discover that although there are an estimated 7.4 billion people on the planet which is projected to grow to 9 billion by 2040, the rate of population growth is collapsing.

For example, population growth has fallen by 72% over the last 50 years in the developed world and is forecast to drop to zero by 2040. See Chart 1.

While the rate of population growth is collapsing, global debt is ballooning with debt levels in 2015 much higher than they were before the global financial crisis in 2007. See Chart 2.

What has helped this burgeoning debt is of course the collapse in interest rates with both the cash rate and the 10 year government bond rate falling by well over 50% in developed economies. This is making it extremely difficult to make money from investing in defensive assets. See Chart 3.

So what is the impact of falling population growth, ballooning debt and collapsing interest rates?

A global slowdown in growth and that is exactly what has happened with GDP having fallen in both advanced and emerging market economies.

How long will this persist?

Well that is the real question and no one knows the answer.

However what we do know is that when the trouble comes and everyone is fearful it will be time to be greedy.


At Newealth we are always looking to support and promote our clients wherever possible and if you have any ideas or comments, please feel free to email me or to call me on +61 2 9267 2322.

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