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How sugar consumption will hurt the global economy

Sugar may not be so sweet when it comes to its effects on the world economy, conclude Morgan Stanley analysts in a new research report. They say that because health is a key driver of economic growth, rising diabetes and obesity rates cloud the outlook in both emerging markets and developed economies.

Taking into account reduced productivity caused by diabetes and obesity, the Morgan Stanley team, led by economist Elga Bartsch in London, finds that gross domestic product growth will average 1.8 percent annually over the next 20 years across nations in the Organisation for Economic Co-operation and Development. That’s below OECD long-term forecasts for 2.3 percent growth. In the same period, the cumulative loss from sugar’s not-so-sweet effects totals 18.2 percentage points.

Morgan Stanley finds that productivity growth in the OECD region drops to 1.5 percent annually over the coming decades when taking into account the sugar-related drag. That compares with the group’s forecast of 1.9 percent yearly growth.

High-obesity nations are biggest losers

Chile, the Czech Republic, Mexico, the US and Australia stand to see the worst sweet-tooth-spurred GDP drag. Japan, Korea, Switzerland, France, Italy and Belgium are looking at smaller output losses from what some call “diabesity.”

The outlook for averting sugar-caused economic harm is dim. While there’s “burgeoning evidence” that sugar consumption is starting to decline in developed markets, it’s on the rise in emerging economies, driven by trends such as wider and cheaper availability of sugar-laden goods, as well as a rising preference for the sweet stuff.

Sugar consumption rates are expected to continue dropping in North America and Europe as the population ages, yet Africa, Central America and Latin America are projected to increasingly demand the sweetener, based on the Morgan Stanley simulations. Asia shows a mixed pattern: If only for aging trends, sugar consumption would drop, yet an ongoing shift to a higher-sugar diet could push up consumption.

The private sector could play some role in alleviating the trend, because food companies are changing products to make them healthier by reducing portion sizes and sugar content, and improving nutrition information and labeling. Even so, the researchers write that “sugar contribution, directly or indirectly, to the diabetic and obesity epidemic can likely be mitigated only via a combination of collective policy-driven and individual behavioral changes.”

Source: Bloomberg, read more

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