As populations grow, the world is undergoing a structural demographic transition. Particularly
evident in developed economies — and increasingly in China — this kind of shift has a powerful
impact on economies, welfare and health systems, and the environment. It affects individual
countries in different ways, with marked differences between the US, Asia, and developing regions.
The outcomes can be both positive and negative. Medical advancements and improved nutrition both
lead to longer and healthier lives. But the resulting ageing population demands greater pension
reforms, when deficits are already significant. Meanwhile, demand for good quality nutrition
increases pressure on food supply chains, healthcare systems, and welfare states.
In addition there is the influence on inflation. As populations age, the proportion of working-age
people shrinks. In some countries this is also influenced by emigration. Tax revenues shrink
alongside, making it ever more difficult for governments to meet needs without new sources
of revenue. The lack of labour pushes up wages, maintaining inflation, and leading to a potential
slowdown in economic growth.
Investors will need to understand the connections between these trends as they may require them to
modify both tactical and strategic asset allocations.
- Growing disparities
- Health
- Economic growth
- Geopolitical tensions
