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Dining with an overweight person may cause people to eat more unhealthy food, according to a study in the journal Appetite. (Kirsty Wigglesworth/The Associated Press)
Dining with an overweight person may cause people to eat more unhealthy food, according to a study in the journal Appetite. (Kirsty Wigglesworth/The Associated Press)

Business Briefing

Obesity rivals smoking and war, with $2-trillion hit to global economy Add to ...

These are stories Report on Business is following Thursday, Nov. 20, 2014.

Follow Michael Babad and The Globe's Business Briefing on Twitter.

Crisis proportions
Obesity has become a $2-trillion weight on a global economy still struggling to rebound from the financial crisis.

Put another way, this obesity “crisis” now costs 2.8 per cent of the world’s gross domestic product, a study released today by McKinsey & Co. found.

And that, said the report from the McKinsey Global institute, is “roughly equivalent to the global impact from smoking or armed violence, war, and terrorism.”

More than 2.1 billion people are overweight or obese, said the lengthy McKinsey report. That’s not only about 30 per cent of the population, but it’s also some 2.5 times those deemed undernourished.

“And the obesity problem is getting worse, and rapidly. If the growth rate in the prevalence of obesity continues on its current trajectory, almost half of the world’s adult population is projected to be overweight or obese by 2030.”

There are, of course, widespread personal issues, besides the hefty cost to the economy, likely the fact that it accounts for some 5 per cent of deaths around the world.

But on the economic front, McKinsey said, obesity also accounts for between 2 per cent and 7 per cent of the health-care spending in developed countries.

When you add in costs of treating related illnesses, it’s closer to an estimated 20 per cent.

Just as an example, the number of people with diabetes, which can be associated with weight in many cases, is forecast to grow “most dramatically” in economies with strong growth, or 38 per cent by 2035 in the group of countries that takes in North America and the Caribbean.

“There is growing evidence, too, that the productivity of employees is being undermined by obesity, compromising the competitiveness of companies,” the study said.

At a $2-trillion cost, the economic impact of obesity in 2012 ranked just behind smoke and “armed violence, war and terrorism,” at $2.1-trillion each.

It was well ahead of alcoholism, at $1.4-trillion, illiteracy at $1.3-trillion, and climate change at $1-trillion.

“The prevalence of obesity is still rising in developed economies, and now, as emerging markets become richer, they, too, are experiencing rising prevalence,” said the report.

“The evidence suggests that the economic and societal impact of obesity is deep and lasting.”

Something needs to be done, the consulting group warned, though there’s no one answer.

“Only a comprehensive, systemic program of multiple interventions is likely to be effective.”

That would include education and “encouraging personal responsibility,” but also “changes to the environment and societal norms,” McKinsey said.

“These interventions reset the default and make healthy behaviour easier and more normal, thereby relying less on individual willpower,” said the study.

“Examples include reducing portion sizes of packaged foods and fast food, changing marketing practices, and changing physical activity curricula in schools.”

Inflation tame
Consumer prices in the United States are doing a whole lot of nothing.

The latest reading by the U.S. Labor Department today showed no change in annual inflation in October compared to September, holding at 1.7 per cent.

Some economists had expected the rate would slip given the plunge in oil prices.

The so-called core rate, which strips out volatile items and helps guide the Federal Reserve, edged up to 1.8 per cent.

“Airline fares jumped as part of that story, but there was no one material driver,” said chief economist Avery Shenfeld of CIBC World Markets.

“We’ll see further downward pressure on headline prices in November given where gasoline prices have been sent, but core is what matters for the Fed .”

GM names new Canadian chief
General Motors of Canada Ltd. Has a new president, The Globe and Mail's Greg Keenan reports.

Stephen Carlisle, who had been vice-president of global product planning and program management of General Motors Co., will replace Kevin Williams, who will retire from GM after a 31-year career at the auto maker.

Mr. Carlisle, who was born in Woodstock, Ont.,  will report to Alan Batey, president of GM North America.

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  • General Motors Co
  • Updated October 21 4:01 PM EDT. Delayed by at least 15 minutes.

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