Groupama AM says ageing demographics cap rise in equilibrium interest rates
TLT•Groupama Asset Management says ageing demographics are likely to keep global savings abundant and limit any rise in equilibrium interest rates. Past studies estimate population aging pushed real rates down by 1-4 percentage points.
1. Aging and savings
Groupama Asset Management said population aging boosted global savings relative to investment, pushing real rates down by an estimated 1-4 percentage points in past studies. Its research challenges fears of a “great demographic reversal,” citing evidence that retirees typically do not quickly draw down savings or liquidate assets; it expects aging in developed markets and parts of emerging economies to keep savings abundant and limit any rate upshift.
2. Cross-border flows
The firm said emerging-market savings could continue flowing into developed financial markets even if trade globalization slows, as financial integration persists.
