According to United Nations data, global population will likely reach nine billion by 2050, despite the trend of shrinking birth rates. The majority of the gains will come from the developing world.
We’ve all heard about the aging of the baby boomers and their impact on the U.S. economy in coming decades. Looking back, the boomers have always been a driving force of many economic booms, busts, and bubbles.
Now consider that each country experiences its own unique population trend. A declining birth rate in the U.S. can have a vastly different effect than an exploding birth rate in a developing country. All of these trends – large and small – result in investment implications for those that take the time to understand them.
This paper describes both short-term and long-term expectations for population trends in the U.S. and globally. It also examines a proprietary formula we developed that ranks countries based on their demographic appeal. Although not the only factor to consider when conducting economic analysis, population trends can provide insight into potential opportunities in specific countries and regions, as well as globally.
- While many economic indicators (including employment, currency exchange rate, and inflation) can be volatile and difficult to predict, demographics stand out as the one indicator that is relatively simple to forecast, especially for the long term.
- For the first time, there will soon be more people on this planet over the age of 65 than under the age of five. This has significant investment implications as older people tend to shy away from risk and rely on steady income.
- By embracing new technologies and integrating into world markets, China and India have been able to leapfrog ahead of countries such as the U.S. and Japan when comparing GDP to population (in other words, productivity).
- According to our analysis, the U.S. has the potential to increase real GDP per person to a level that would put it in the top quartile of countries, largely due to education levels, exports, and property rights and rule of law.
- We expect worldwide economic growth to continue (coupled with high volatility) despite the declining population growth rate and a significant increase in the age of the population.