This is old news to Trends Journal subscribers, but new news in the mainstream state of mind. Public debt shouldered during the COVID Wars is only a portion of the financial perils facing the world in coming decades, according to the Organization for Economic Cooperation and Development (OECD), whose members are the world’s 38 richest nations.
Economic slowdowns in large emerging economies, an aging population, and slowing gains in workers’ productivity will brake economic growth among the OECD member nations to 1.5 percent in 2060 from around 3 percent currently, the group predicted, while countries face growing costs, largely due to pension payments and health care needs of older adults.
If nations are to provide those services without sinking deeper into debt, governments must raise revenues by 8 percent of their gross domestic products, the OECD said.
In France, Japan, and some other nations, the new costs would demand raising government revenues by more than 10 percent of GDP, the OECD predicted.
The forecasts did not include other costs, such as dealing with the larger number of extreme weather events or mitigating other effects of climate disruption.
“Secular trends such as population aging and the rising relative price of services will keep adding pressure on government budgets,” the OECD’s report said. “Fiscal pressure from these long-run trends dwarf that associated with servicing COVID-legacy public debt.”
If countries are unwilling to raise taxes to meet the new cost burdens, they could implement reforms such as raising retirement rates, the report noted.
Such actions, including continually adjusting the retirement age by two-thirds of the number of years gained annually in life expectancy, could cut by half the projected increase in new costs by 2060 in the typical country, the OECD said.
TREND FORECAST: As the rich get richer and most of the citizens get poorer, we maintain our forecast for social uprisings and civil wars, particularly in the emerging markets. This will also exacerbate the refugee crisis as people seek to escape poverty, government corruption, crime and violence for safe haven nations.
This in turn will escalate anti-immigration, anti-establishment movements in those “safe-haven” nations where citizens are also witnessing the same socio-economic elements of decline… but at lower rates.