So, what's next?

Despite of the multiple rounds of quantitative easing in the U.S. and in other economies like Japan, U.K., E.U. and China ....etc since the financial crisis in 2008, trillions of dollar flooded the world, however, the world economy in the past decade did not exhibit a corresponding growth relative to the scale of the money injected in the financial system. Except the first round of the Q.E. which aimed to ease the liquidity resulting from the panic of the financial market, most of the following Q.E. were actually for the sake of boosting the sluggish economic growth in the related economies. Yet, in fact the performance of all countries which exercised Q.E. are far from satisfactory. So what's wrong on the world economy?

Economic growth can be a result of one or the combination of the increase in productivity, population and natural resources. Productivity is mainly consisted of technological breakthrough and human capital, ie., how things are done and the skillfulness of the work force. Population is not only about the numbers of people but most of all the numbers of people with productivity and/or consumption needs. Natural resources define the range and level of tangible raw materials a country or the whole world can utilize. Simply speaking, when a country enjoys a growing work force with increasing skill competence and there are abundance of natural resources available as well as innovation on production then it is bound to have a robust economy.

One may argue that capital plays a vital importance in an economy especially the capitalism countries. It is absolutely true the more advance and modern an economy is, greater the capital plays its role as money is the carrier of all transactions in capital oriented economy. Capital is the lubricant facilitates the economic activities in all capitalism economies. However, it is a must but not the dominating driver.

When the financial crisis broke out in 2008, liquidity problem happened because of the counterparty risk surged when uncertainty and panic dominated the market. The first round of Q.E. originated by the FED aimed to solve this liquidity shortage and it did save the U.S. economy as well as the world economy from the brink of collapse. Not only the salvation on the liquidity crisis but the U.S. economy recovered steadily since then. Unknowingly the FED is hooked on this economic opium so following rounds of Q.E.s were implemented whenever signs of economic sluggish surfaced.

By injecting trillions of dollar into the economy while the money got stranded in the financial system though due to weak borrowing or more specific speaking the lack of qualified borrowing as the real economy is still suffered from the deep-seated problems. The world economy faces a strange sort of scenario that money floods the financial world but some businesses in the real world are hungry for lending because they cannot show a healthy balance sheet to the banks.

The deep-seated problems the real world economy are facing are back to the square, ie., productivity, population and natural resources. The world's productivity experienced a few leaps in human's history during the industrial revolution, liberation of women into work force and universal education. The baby boom after the WWII and the following decades of peace time led to a surge of world population. On the other hand in the natural resources, the development of the petrochemistry industry provided the world a much more efficient fuel and the all-round magical material, plastic, apart from the naturally limited supply of iron, wood and natural fibres. Except the industrial revolution, all the goodies happened after the WWII and they were the significant driving force behind the world's economic growth in the past few decades. On the contrary when one looks forward what lies ahead in terms of these old goodies? Things are less promising.

While forecast on the world population is still a positive figure but the ageing population not only in the developed countries but the world's second largest economy, China, is evidenced. That gives rise of two problems, diminishing work force as well as products demand, but both leads to a sluggish economic growth.

After enjoying the fun time with plastic in the past few decades, people started to face the dark side of this magical material. It just stays there in our environment for centuries once people made it. Now all the five oceans are flooded with plastic waste. Some is even broken down into micro plastic which sneaks into the food chain. While human is trapped into the dilemma of the usage of plastic but another magical material that can give another dramatic impact on the economic growth is not yet in sight.

Among the three dominant driving forces, productivity is the only one seems to be the silver lining. Despite of the shrinking work force, leaping technology on robots combined with A.I. perhaps can just fill the gap. Some people put a high expectation on the 5G telecommunication technology which is supposed to increase the Internet speed by 20 folds. 5G plus IoT perhaps is another wave of the increment on productivity after the invention of steam engine.

Technology is no doubt a drive in the productivity which in turn steams the economy but after all, productivity is just about making products more efficiently but at the end of the day there must be a corresponding demand on these products then the growth on economy can be materialized. According to the information in the website (https://www.worldometers.info/demographics/world-demographics/) that more than 24% of the world population is 50+ years old. At the first glance it does not sound too bad but when we take a closer look into the demographic on the most advanced economies like the U.S., E.U. and Japan and the self-claimed developing country but the second largest economy, China, where they represent the most significant demand on consumption then the outlook is rather pessimistic because the chunk of the people with the strongest consumption is ageing and most of all, there are a contracting demographic meaning a negative population growth across the board.

One can imagine after the batch of the strongest buying power in the most affluent countries died then the consumption demand in the whole world will just shrink significantly. Despite of the increase in the productivity or possibly the emergence of another magical material but if there is less demand as a whole, so what's the next drive on the global economic growth for the future decades to come?