Youth: a double-edged sword
We have mentioned on many occasions how powerful the youth of India are as an economic motor for decades to come. India is home to 25% of the world’s population aged under 25.
But economies can’t grow by youth alone. There must be education, jobs, and a dynamic political and economic structure.
Sadly this can all go wrong. A key element in the “Arab spring” was dissatisfied youth. This was anticipated in a CIA report as long ago as 2001. See “Our changing world” opposite.
Although the populations in Europe are not as young, it creates a tinderbox environment when youth unemployment is so high e.g. 45% in Greece and 49% in Spain.
Populism and anti-immigrant sentiment is on the rise, and battalions of unemployed youths are easy fodder for demagogues.
And it is unhelpful when democracy is already on hold as in Greece and Italy, now led by unelected technocrats.
Unsurprisingly, the Economist Democracy Index notes popular confidence declining in
(democratic) political institutions.
in 2011.
Turning to the positives, in recent years the younger populations of India, Indonesia, and Brazil have been significant drivers of their superior economic performance.
Positives are vivid
In a short number of years those young people will enter the life stage when they are heavier spenders, bigger borrowers, and aspiring home owners - driving these economies to new levels.
Just to take India alone:
• India’s working population is as big as China’s
• Another 120 million people will enter the Indian workforce over the next 10 years
• This is more than the whole current working population of Brazil
• By 2020 India will hold approx. 21% of the total global workforce
Lesson? Be careful, but don’t be parochial in your investment choices.
We believe that any adviser should be able to show you their investment track record