What is going to happen to the world economy? We will never know the answer to this question. In one decade after another, something big and largely unexpected has occurred: the great inflation and oil shocks in the 1970s, the disinflation of the early 1980s, the fall of the Soviet Union and the rise of China in the 1990s, the financial crises in the high-income economies in the 2000s and the pandemic, post-pandemic inflation and wars in Ukraine and the Middle East in the 2020s. We live in a world of conceivable and obviously consequential risks. Some — war among nuclear great powers — could be devastating. The difficulty is that low-probability, high-impact events are nearly impossible to forecast.
Yet we also know of some big features of our global economy that are not really uncertain. These must also stay in our minds. Here are five of them.
The first is demography. The people who will be adults two decades hence have all been born. The people who will be over 60 years old four decades from now are already adults. Mortality could jump, perhaps because of a terrible pandemic or a world war. But, barring such a catastrophe, we have a good idea of who will be living decades from now.