• Investment Management

Immigration Could Hold the Key

The world is facing a shortage of working-age people, says Ruchir Sharma, at Morgan Stanley Investment Management.

For years the popular belief has been the world is heading for population overload. Recent reports by the United Nations suggest another 2.4 billion babies will be born over the next 35 years, leaving the earth teeming with 9.7 billion people. Where will they all live? Will there be enough food?

The concerns are misguided, according to Ruchir Sharma, head of emerging markets and global macro at Morgan Stanley Investment Management.

In his latest Wall Street Journal op-ed, “How the Birth Dearth Saps Economic Growth,” Sharma says it’s no coincidence that global GDP growth has been trending lower this decade, at the same time as the growth in the work-age population, ages 15-64, has been slowing. Since 2005 the growth of working-age people has slowed from about 1.8% to 1%.

Fewer Children

That’s because women globally are having fewer children. Since 1960 the average number of births per woman has dropped to 2.5 from nearly 5.

“For much of the post-World War II era the world’s population grew at an average annual rate of almost 2%. But growth started to plummet in 1990 and is now running at about 1%—the lowest level in the postwar era,” says Sharma.

This means that countries like the US and Europe need to increase the number of working-age migrants they’re taking in if they want to ensure long-term economic growth.

“This collapse is seriously undermining potential economic growth…and goes a long way toward explaining the sluggish recovery from the crisis of 2008,” he argues.

Ruchir Sharma has been included in this year’s Bloomberg Markets 50 Most Influential list.

Important Disclosures


The material contained in this article is current as of the publication date of the article, is intended for informational purposes only and does not purport to address the financial objectives, situation or specific needs of any individual investor. It has been obtained from sources believed to reliable, but Morgan Stanley cannot guarantee its accuracy or completeness. The use of this article is not a solicitation, or an offer to buy or sell any security or investment product. In addition, this material is not an offer, or a solicitation of an offer, to buy or sell securities in the regions and sectors mentioned.


The views and opinions are those of the author and are subject to change at any time due to market or economic conditions and may not necessarily come to pass. The views expressed do not reflect the opinions of all portfolio managers at Morgan Stanley Investment Management (MSIM) or the views of the Firm as a whole, and may not be reflected in all the strategies and products that the Firm offers. Forecasts and estimates are subject to change and may not necessarily come to pass due to changing market and/or economic conditions.


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Data sources include World Development Indicators, United Nations, Haver Analytics, US Bureau of Labor Statistics, US Bureau of Economic Analysis, Eurostat, The Economist, BDO International, Hamburg Institute of International Economics and MSIM Emerging Market Equity Research.


Risk Considerations:


All investing involves risk including the risk of loss. Investments in foreign markets entail special risks such as currency, political, economic, and market risks. The risks of investing in emerging-market countries are greater than the risks generally associated with foreign investments.


This communication is only intended for and will be only distributed to persons resident in jurisdictions where such distribution or availability would not be contrary to local laws or regulations.


Bloomberg Markets 50 Most Influential


Bloomberg favors recent accomplishments over lifetime achievements. Half the people here have never appeared on the list before. Tech executives and entrepreneurs and the venture capitalists who fund them are ascendant of late, and the list reflects that. China, for better or worse, is vital to global markets, and Bloomberg has a bigger Asia cohort than ever.


To build the list each year, Bloomberg starts with a much larger universe of candidates, compiled with the help of Bloomberg News reporters and editors around the world. They also rely on the rankings, profiles, and cover stories they publish throughout the year in Bloomberg Markets. Then the magazine’s editors winnow it down, making the hard calls about who’s in and who’s out.


This year, for the first time, Bloomberg enlisted the help of nine industry experts, who convened as the advisory board for their companion conference, the Bloomberg Markets Most Influential Summit.


© 2015 Morgan Stanley. All rights reserved. Morgan Stanley Distribution, Inc. serves as the distributor of the Morgan Stanley Funds.

 

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