Тузувчи : Файзуллаева Н

Figure 5: Historical and forecast world real GDP growth rate based on Historical Average Multiple

Source: UN Population Division and World Bank
The IMF states that, “global [GDP] growth falling below 2 percent [the purple dotted line in Figure 5], would be consistent with a recession in advanced economies and low growth in emerging market and developing economies”[35].  Figure 5 shows that the world real GDP growth rate could fall below 2% by around 2022 (under the mid scenario), and continue to decline.  This would mean that, not allowing for inter year variations, which Figure 1 shows would occur, or inter-country migrations and trade, developed economies would consistently be in recession from around 2022 onwards (Figure 5 red line). 

It is worth noting that the forecast mid UN population growth rates (Figure 4 red line) that have been used in Figure 5, show an average annual growth rate of 0.7% to 2060.  The OECD, in forecasting their world real GDP growth rate, used a population growth rate of 0.3%[36].  A growth rate of 0.3%, as used by the OECD, is in line with the forecast low UN population growth rate (Figure 4 blue line) scenario.  Under this low population growth scenario, the Average Multiple would need to change from 2.1 times to approximately 10 times (GDP growth of 2.9% divided by population growth of 0.3%) to achieve the OECD world real GDP growth forecast.  Another way of putting it is that according to the OECD, world real GDP growth will grow against world population growth at approximately 5 times faster than it has at any point in time historically.

Whilst the OECD states that technological and other advancements would be the main driver of this increase, those advancements would have to be significantly more than what we have seen at any point historically.  This includes in the last 10 years (Figure 2) where technological improvements have been significant.  In fact the OECD states that “during the past decades economic growth among high-income countries has been underpinned by efficiency improvements driven by technological innovation”[37], and yet there has been no change in the underlying Historical Average Multiple which would support this.  The OECD goes on to state that in the long run “all countries are expected to keep [GDP] growing at the same pace determined by the worldwide rate of technical progress”[38] suggesting that only technological progress will support growth.  However what they fail to note is that it needs to be something that has never been seen before. 

This paper outlines that the key driver of world real GDP growth is future world population growth.  Figure 5 shows that according to the UN forecasts and the Historical Average Multiple (Figure 4), developed economies could be in recession by 2022, as early as 2013 and as late as 2045 (excluding inter-year variations and inter-country migration). 

It is also interesting to note that the fertility rate of countries tends to decline faster in a “recession” before picking up in healthier economic times[39].  If developed countries were continually in recession this could suggest that fertility rates could continue to decline.  As an example, in 2011 in the United States of America the birth rate fell to the lowest level in recorded history[40].  This could put pressure on the forecasts used in this paper which could then mean the point of no return for developed countries entering into recessions would be sooner.