Demographics
Overview
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Global megatrends are prompting structural shifts in many industries and changing the drivers of corporate earnings. The global population has reached 8 billion people. The make-up of this population is changing fast; we are getting older, we are getting richer, we are migrating to cities and our patterns of work are changing. These megatrends translate into specific drivers for each sector and industry.
Population Growth
Eight billion people
The world’s population is projected to reach 8 billion on 15 November 2022. The latest projections by the United Nations suggest that the global population could grow to around 8.5 billion in 2030, 9.7 billion in 2050 and 10.4 billion in 2100. This growth is caused in part by declining levels of mortality [1].
More than half of the projected increase in global population up to 2050 will be concentrated in just eight
countries: the Democratic Republic of the Congo, Egypt, Ethiopia, India, Nigeria, Pakistan, the Philippines and the United Republic of Tanzania. India is projected to surpass China as the world’s most populous country during 2023.
The population of the UK is projected to increase by 3.2% from an estimated 67.1 million in mid-2020 to 69.2 million in mid-2030 [2].
Population growth though is slowing and the populations of Eastern and South-Eastern Asia, Central and Southern Asia, Latin America and the Caribbean, and Europe and Northern America are projected to reach their peak size and to begin to decline before 2100.
Most impacted industries: Retail & Consumer Goods, Financial Services and Healthcare.
Aging World
Life expectancy exceeds 72 years
The share of the global population aged 65 years or above is projected to rise from 10 per cent in 2022 to 16 per cent in 2050. At this point, the number of persons aged 65 years or over worldwide is projected to be about the same as the number of children under age 12 [1].
This growth is driven by lower mortality and increased survival as well as by a sustained drop in the fertility level. Globally, life expectancy reached 72.8 years in 2019, an increase of almost 9 years since 1990. Further reductions in mortality are projected to result in an average longevity of around 77.2 years globally in 2050 [2].
In Western Europe, 1 in 5 people are older than 65 and this is expected to rise to 1 in 4 in the next decade [3]. In 2016 18% of the UK population was aged 65 and over, a figure expected to rise to 25% of the population by 2046 [4].
Most impacted industries: Healthcare and Financial Services (pensions). There is also a significant impact on Governments (tax collection, pensions and health/social care).
International Migration
Inflows exceed births
In some parts of the world, international migration has become a major component of population change. For high-income countries between 2000 and 2020, the contribution of international migration to population growth (net inflow of 80.5 million) exceeded the balance of births over deaths (66.2 million). Over the next few decades, migration will be the sole driver of population growth in high-income countries [1].
Most international migration is voluntary and driven by economic opportunities and personal motives, but forced displacement due to armed conflicts or natural disasters is increasing. In the coming decades, environmental degradation and climate change are expected to become increasingly important drivers of migration. Overall, 200 million people could be displaced due to climate change by 2050 [2].
UK population growth over the next 10 years is projected to be driven by a net 2.2 million people migrating into the country [3].
Most impacted industries: Healthcare and Transportation. There will also be an impact in Governmental spending in Defence & Security.
Rapid Urbanisation
Half the world is urban
Until 2009, more people lived in rural than in urban areas. Today, around 55% of the world’s population lives in towns and cities, with the level of urbanisation projected to reach almost 70% by 2050 [1]. By 2045, the world's urban population will increase by 1.5 times to 6 billion [2]. Much of the growth in urban populations will take place in Asia and Africa, especially in China, India and Nigeria where the fertility rates remain high.
In Europe, urban growth is projected to be slower than in Asia and Africa, and the share of Europeans living in cities is estimated to rise from currently 74 % to around 80 % in 2050 [3].
At present, cities occupy less than 2% of the world’s total land but produce 80% of the global gross domestic product (GDP) and over 70% of carbon emissions [4]. Tokyo and New York were the only megacities, with more than 10 million inhabitants, in 1970; by 2014 there were 28, most of which were located in the global south; and, by 2030 there could be 41 globally [5].
Most impacted industries: Transportation, Technology, Media & Telecommunications, Construction and Energy & Resources. Government impacts will be on social (healthcare, education) and physcial (housing, roads, transit etc.) infrastructure.
Middle Class Weath
The rise of Asia
The size of the “global middle class” will increase from 1.8 billion in 2009 to 3.2 billion by 2020 and 4.9 billion by 2030. The bulk of this growth is in Asia, which by 2030 will represent 66% of the global middle-class population and 59% of middle-class consumption, compared to 28% and 23%, respectively in 2009 [1].
By constrast, the middle classes in developed markets are still struggling to maintain the economic position they once enjoyed as a result of the 2008 global financial crisis and flat growth during the last decade. As a result of shifting economic power, consumers within the middle-class group are now changing their consumption habits and priorities, especially with the rise of "digital natives". The is related to shift of work from a single “job for life” to multiple roles within a diverse career and more recently the advent of the “gig economy” is having a profound effect on work patterns. The COVID-19 pandemice and the acceleration of remote working has only accelerated this.
Most impacted industries: Technology, Media & Telecommunications, Retail & Consumer Goods, Travel and Financial Services. Education is a key enabler of middle class wealth.