When Charles Dickens published “A Christmas Carol” shortly before Christmas 1843 he took a chance in the final part of the novel forecasting the distant future. In particular, Dickens was looking at how the main character, Ebenezer Scrooge, would be remembered at a Christmas shortly after Scrooge’s death a decade or so in the future. What Dickens described about Christmas future was perhaps an early warning to those legions of forecasters since trying to take a long-term view. Over the longer term the world changes in ways that is near impossible to forecast.
In Dickens’ case he made the perfectly reasonable assumption that Christmas in the future would still be a very cold and inevitably snowy affair. Dickens grew up during the last mini ice age in Britain, a period when it did snow every Christmas in London and the Thames froze solid for weeks on end allowing winter fairs to be held on the ice. This period extended through the mid-1820s but was already starting to change by 1843 when Christmas Carol was written, and by 1853, roughly the future Christmas period Dickens was referring to, conditions were much milder and snowy Christmases were extremely rare, much as they have been ever since in London (there have been only four since 1900).
Long-term forecasts need to be treated warily. Nevertheless some organisations routinely make very long-term forecasts, including the Australian Bureau of Statistics. Their latest set of long-term forecasts released last week relate to a key plank of future economic growth, population change.
According to these forecasts, between 2015 and 2050 Australia’s population lifts by more than 58% to 38 million, a growth rate that shapes up very well by international comparison. Global population, for example, is forecast to rise by 32% over the same period to 9.73 billion. In fact, on the ABS/ United Nations World Population forecasts Australia will experience one of the fastest population growth rates over the next 35 years.
Among our major Asian trading partners population growth is forecast to be very different for our top three export markets. China’s population is forecast to fall by 2% to 1.35 billion by 2050; Japan’s population falls by 16% to 107 million; and South Korea’s population rises, but by only 1% to 51 million. These population change figures alone hint at a subdued economic growth future for these three countries and more particularly less urban development, less need for mineral and energy commodities, and a continuing problem for Australia’s big resource companies.
There are other important Asian export markets, however, where population is forecast to grow comparatively fast. By far the most important is India where population is forecast to rise by 30% to 1.71 billion. Indonesia is forecast to see population rise by 25% to 322 million and the Philippines by 47% to 148 million.
On the heroic assumption that these population growth forecasts come anywhere close to fruition (just look at the odds that British bookmakers offer on a white Christmas in London these days to see how heroic the assumption may be) there are some pointers to Australia’s longer-term economic future. The first is that Australia’s economic growth rate is likely to be high compared with many other countries given our near-stellar forecast relative population growth rate. The second is that Australian businesses looking to do business primarily with China, Japan and South Korea may find the going tougher than businesses looking towards the next league of fast growing Asian economies – India, Indonesia and the Philippines.
All told Australia’s Christmas future looks a lot brighter than many give due credit.
Wishing our readers a Merry Christmas and a happy and prosperous New Year. The next economic commentary will published on Monday 4th January 2016.