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Economies and politics go through cycles, but demographic trends are stable, predictable forces that should be a key consideration for investors, suggests a report from UBS AG.

The report looked at how demographics around the world could impact economic growth. For instance, it said population trends in Europe could cut the continent’s economic growth prospects by 1% in the years ahead.

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Regions with fast-growing populations will likely face growing pressures on resources and environmental challenges, the report noted, while countries with rapidly aging populations will see the threat of declining living standards and rising fiscal deficits.

“Population growth, aging, and urbanization are robust and predictable long-term demographic trends. They will persist through economic cycles and periods of political uncertainty alike,” the report said.

Yet, the precise market impacts of these trends is uncertain, as they will depend on how governments, policymakers and societies respond.

“Given these uncertainties, demographics should influence but not dominate long-term investment decisions,” the report said.

In particular, the report suggested that international diversification to give investors exposure to countries that are at different demographic stages “should be a prime focus.”

Additionally, it recommended “investing in equity markets that benefit from the growth of younger populations or the transition to the consumer economy.”

“But it is not the demographics of the company’s country of domicile that matters; it’s the demographics of the markets the company serves,” the report said.

Moreover, the report suggested that investors in government bonds of countries with rapidly aging populations and high debt “should assess whether the potential returns sufficiently compensate them for the underlying risk.”