Risks To Businesses From Population Decline

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A Shrinking World: Strategies for Business Growth in a Declining Population

A recent study by the Institute for Health Metrics and Evaluation (IHME), published in The Lancet, paints a picture of a world with a shrinking population by the year 2100. This demographic shift, driven by falling fertility rates, presents significant challenges for businesses across the globe. However, amidst the potential disruption, there are also opportunities for those who can adapt and innovate.

This article explores the implications of a declining population for businesses and outlines actionable strategies to navigate this new reality.

Understanding the Impact

Falling fertility rates translate to a smaller workforce, impacting both the supply of labor and the overall size of the consumer market. Here’s a breakdown of the key challenges:

  • Labour Shortage: A shrinking workforce pool will make it harder to find qualified employees. This could lead to wage inflation and potentially hinder business expansion plans.
  • Shifting Consumer Demographics: An aging population means a decrease in demand for certain goods and services traditionally targeted towards younger demographics. Businesses that cater to families with children or young professionals might see a decline in sales.
  • Social Security Strain: With fewer working-age adults supporting a larger elderly population, social security systems may face financial pressure. This could lead to increased taxes or reduced benefits, impacting disposable income and consumer spending.

Strategies for a Shrinking World

Despite the challenges, there are strategies businesses can employ to thrive in this new environment:

  • Embrace Automation and AI: Investing in automation and artificial intelligence (AI) can help offset labour shortages by automating routine tasks and improving efficiency. This allows businesses to do more with less manpower.
  • Focus on Innovation: Developing new products and services catering to the needs of an ageing population is crucial. This could include healthcare solutions, senior living facilities, or products designed for increased accessibility.
  • Reskilling and Upskilling the Workforce: Companies can invest in training and development programmes to equip existing employees with the skills needed for new technologies and changing market demands.
  • Attract and Retain Talent: In a competitive job market, attracting and retaining top talent becomes even more important. Businesses can do this by offering competitive compensation packages, flexible work arrangements, and a positive work culture.
  • Embrace Diversity and Inclusion: A shrinking workforce necessitates tapping into all available talent pools. Diversity and inclusion initiatives that attract women, minorities, and older workers can be a game-changer.
  • Expand into New Markets: Businesses can explore opportunities in countries with higher fertility rates or younger populations. This may involve setting up operations overseas or catering to these demographics through exports.
  • Sustainability and Resource Optimisation: A smaller population might lead to a decrease in resource consumption. Businesses can adapt by focusing on sustainability, developing resource-efficient products, and minimising waste.
  • Invest in Customer Experience: With potentially fewer customers, businesses need to prioritise customer loyalty and satisfaction. Building strong relationships and providing exceptional customer experiences will be critical for retaining a shrinking customer base.
  • Leverage Technology for Marketing and Sales: Marketing and sales efforts can be optimised by utilising big data and analytics to identify and target specific customer segments more effectively.

Examples of Business Adaptation

Several companies are already taking steps to adapt to a shrinking population:

  • Manufacturing: Companies are investing in automation and robotics to reduce reliance on manual labour.
  • Healthcare: Businesses are developing products and services catering to the growing elderly population, such as home healthcare solutions and assisted living facilities.
  • Retail: Retailers are focusing on online shopping experiences and offering delivery services to cater to a more homebound population.

A Call to Action

The declining global population is a long-term trend, but the effects will vary by region and industry. Businesses that proactively recognise this shift and implement adaptation strategies will be best positioned for continued success. By embracing innovation, reskilling their workforce, and catering to the needs of an aging population, businesses can not only survive but also thrive in this new demographic landscape.

Looking Forward

The future may hold a smaller global population, but it also presents exciting opportunities for innovation and growth. Businesses that are proactive and adaptable will be the ones to shape this new economic landscape. The time to plan for a shrinking world is now.

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Risk Review 28 June 2022: Transitioning to a global recession in 2023

Exploring preparation for a global recession with a businessrisktv.com

What happens to commodity prices in a recession

The coming global recession will slash demand for oil copper and the like. Prices for most commodities will fall. If the world falls into depression commodity prices will fall off a cliff including oil.

Some prices can rise temporarily as people seek a safe haven. People may flee to gold or a few commodities that they think will safe harbour their money during a recession. However a depression, which is more and more likely, causes most commodity prices to collapse.

June’s weaker demand for commodities signals that an economic global recession is coming closer.

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Global recession is necessary to stop runaway global inflation. The hard landing is the only option now available due to the lacklustre response to control inflation by Central banks and global national government.

Agricultural demand and energy demand is likely to keep rising during the autumn and winter and will sustain high commodity prices. This is likely to be aggravated by poor geopolitical decision-making by incompetent national leaders and global bodies like WHO, UN and WEF puppet masters and pied pippers particularly as it relates to food, water and energy. It is likely that another health crisis will emerge in the autumn winter and spring and this is likely to be managed in a restrictive way due to the propensity of these international bodies to take more and more health and economic risk management control. In addition, as demand falls due to rising inflation it can be combined with increased supply chain disruption imposed by recommended risk management action by international bodies that national governments adopt. Worse WHO wants overseeing overriding control of the next wave of the pandemic or next health pandemic.

Demand is likely to stay the same or slightly lower, but our leaders can change the supply up or down with their decisions. Reducing supply will push up prices.

Global stagflation is a certainty. When not if.

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Global commodity prices

Wheat and oil future prices are down in June based on the most actively traded futures. Weaker commodity prices in June indicate we are transitioning to a global recession. Although commodity prices will fall, inflation will increase and stay high whilst growth turns to recession. For example there will be less demand for oil, oil prices will fall, but prices of goods and services will remain high.

Surviving global recession: how do you prepare for a recession

Businesses that can offer business discounts and consumer discounts are more likely to survive as more people become price conscious.

Businesses that supply essentials or luxury items at a discount offer more in the marketplace compared to those businesses who have let their own costs of being in business balloon and cannot offer deals and discounts.

  • Discount grocery and retail stores tend to have more footfall during a recession. Many supermarkets take advantage of their customers during the good times and suffer a loss of business and profitability when recessionary precious hit the consumers household budget.
  • People still die during recession! After the management of global risks over the last two years more people will die. businesses which cater for death are likely to perform strongly throughout a recession.
  • People turn to drink and drugs during a recession! Businesses providing alcohol and drugs will perform strongly during the coming recession.
  • You still have to pay your taxes! Accountants and tax advisors are likely to still perform well during the recession.
  • Everyone can afford a bit of lippy! Cosmetic businesses can perform well during a recession.

As for the rest of businesses, they must fully understand what’s important and what is not for their particular business model. Offering more value for money will become more important.

Wheat and oil prices are down in June based on the most actively traded futures market
Global recession 2023

Risk Review 28 June 2022: Transitioning to a global recession in 2023

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We will not manage this crisis quicker by doing what we have always done. Neither will post crisis be better by going back to business as as normal.

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And there are always opportunities to grow a business faster too. There are always leadership challenges regardless of era in business. Improve management of the biggest issues facing the business world today.

Learn how to overcome leadership challenges. Being a successful business leader means there will always be challenges. The business problems will change but it is naive to thing that your challenges are more difficult than the challenges other leaders have overcome in the past.

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We can achieve so much more than we are currently doing. There is a significant lack of investment in innovation and new ideas to overcome business challenges. Perhaps it is a hangover from the slow recovery from the 2008 financial crisis. Business leaders have thought about survival for so long that it has suppressed a more creative and innovative business world.

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Deutsche Bank currency guru says it’s ‘time to sell the dollar’ as greenback sees longest losing streak since 2021

The dollar has been on a losing streak in recent weeks, and a top currency strategist at Deutsche Bank is betting that the trend will continue.

George Saravelos, global co-head of FX research at Deutsche Bank, said in a note to clients on Thursday that he’s once again betting that the dollar will weaken against the euro, Japanese yen, British pound, and other major currencies.

“We believe that the dollar’s recent weakness is more than just a temporary correction,” Saravelos said. “We see a number of factors that are likely to keep the dollar under pressure in the coming months.”

One of the factors that Saravelos is pointing to is the Federal Reserve’s plans to raise interest rates. The Fed is expected to raise rates several times this year in an effort to combat inflation. However, Saravelos believes that the Fed’s rate hikes will be less effective than they have been in the past because the global economy is now in a different phase.

“The global economy is no longer in a synchronised growth upswing,” Saravelos said. “This means that the Fed’s rate hikes are likely to have a more muted impact on economic activity and inflation than they would have in the past.”

Another factor that Saravelos is pointing to is the strength of the euro. The euro has been rising in recent weeks, and Saravelos believes that this trend is likely to continue.

“The euro is benefiting from a number of factors, including the strong performance of the European economy,” Saravelos said. “We believe that the euro is likely to continue to outperform the dollar in the coming months.”

Saravelos’s call is a reversal of his previous stance. In January, he said that the dollar was “oversold” and that he expected it to rebound. However, he has since changed his view, and he now believes that the dollar is likely to continue to weaken.

Saravelos’s call is in line with the views of other currency analysts. A recent survey by Bloomberg found that 60% of currency analysts believe that the dollar will weaken in the coming months.

If Saravelos is right, it could have a significant impact on the global economy. The dollar is the world’s reserve currency, and its value has a major impact on the prices of commodities, assets, and goods. If the dollar weakens, it could lead to higher inflation and lower economic growth.

Of course, it’s impossible to say for sure what will happen to the dollar in the future. However, Saravelos’s call is a warning that the greenback’s days of dominance may be coming to an end.

In addition to the factors mentioned by Saravelos, there are a few other reasons why the dollar could continue to weaken.

  • The US trade deficit is widening. This means that the US is importing more goods and services than it is exporting. This puts downward pressure on the dollar.
  • The US economy is growing more slowly than other major economies. This means that investors are less likely to hold dollars as a safe haven.
  • The US political landscape is becoming more polarised. This could lead to uncertainty and volatility in the markets, which could also weigh on the dollar.

Of course, there are also some factors that could support the dollar. For example, if the Fed raises interest rates more aggressively than expected, it could boost the dollar’s value. However, overall, the trend seems to be pointing towards a weaker dollar.

What does this mean for investors?

If you are an investor who is holding dollars, you may want to consider hedging your bets by investing in other currencies. You may also want to consider investing in assets that are less sensitive to changes in the dollar’s value.

If you are a business that exports goods or services, you may benefit from a weaker dollar. This is because a weaker dollar will make your goods or services cheaper for foreign buyers.

Overall, the outlook for the dollar is uncertain. However, there are a number of factors that could lead to a weaker dollar in the coming months. Investors and businesses should be aware of these factors and should adjust their strategies accordingly

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