For those interested in demographics, Deustche Bank has published another big report. The demographic challenge: Simulations with an overlapping generations model (PDF) by Bernhard Gräf and Marc Schattenberg simulates the Germany population over the next 150 years, using their own OLG model. Their main conclusion is that "we will have to get used to substantially lower prosperity gains going forward." Here are some of the results of their simulations:
The growth potential of the German economy will shrink from about 1 ¼% p.a. at present to a mere ¼% p.a. by about 2060.
The annual increase in real income per capita will be dampened by up to 0.3 of a percentage point up to 2050, falling to just below 1% p.a. This comes to only one-third of the annual increases in prosperity from 1955 to 2005.
Under “Status quo” conditions, the return on capital will decline by around 100 basis points by 2060.
A change of pensions policy towards “More personal provision” would drive down returns by a further 35 basis points.
And the old-age dependency ratio is set to nearly double by 2060. But longer term, there is some good news:
Our projections suggest that the population in our “model world” will decline by a further 15% from 2050 to 2080 and then remain stable from about 2150.
That's all right then.