Population 2050: A view

LCP Partner Amlan Roy examines the population shifts expected by 2050.

While Thomas Malthus many centuries ago warned of doomsday with regards to resourcing for growing populations, those forewarnings did not come to bear. Post-war reconstruction efforts, growth in education, technology, business and real estate alongside a dramatic increase in globalisation have meant unprecedented population growth over 1950-2000. Of course, no one can see into the future, and it’s impossible to understand that to project or forecast with credibility any economic variable or one influenced by socio-economic factors as far into the future as 2050. What is clear though is that there is going to be phenomenal change driven by economic, social and technological innovation and that the seeds of this change have been sowed.   

The chart below includes UN Population forecasts until 2100 based on the medium fertility scenario. 

The largest advanced country populations in 2050 will be the United States (375.29 mn), Germany (78.93 mn), France (65.83 mn), Italy (52.25 mn), UK (71.09 mn), Japan (103.874), India (1.67 bn), Indonesia (317.22mn), Turkey (95.83 mn), Russia (133.13 mn), Brazil (230.89 mn), China (1.31 bn), Nigeria (377.46 mn). There are projected to be divergences across even the largest advanced countries (G6) which cautions us against drawing conclusions about these advanced countries as a homogenous group. The differences are significant enough to add up cumulatively over nearly a quarter of a century. The demographic projections could very easily change due to national or international policy changes or changes in individual behaviour.

Rapid socio-economic changes driven by individual, corporate and national behaviours have driven population growth differently across countries (even for those similar sized, proximate or ideologically similar). Ageing advanced countries all face low fertility rates and high life expectancies (both historically unprecedented), combining to give extremely high old-age dependency ratios that contribute to huge public debt levels and low growth. This means that gender equality remains a distant prospect yet for them. The situation for less developed and low-income countries is one of declining fertility rates from high levels and increases in life expectancy from low levels, which are in a different stage of demographic transition relative to the advanced countries. They face the challenges of low employment levels and lower skills/productivity levels relative to rich countries, while their recovery from COVID adversities remains partial. The health challenges of infant and child mortality struggles for clean air and water in crowded megacities, political instability, and violence limit the quality as well as the length of lifespans in the poorest countries. 

Age is just a number…

The key to understanding population change is to understand population differences across different times, as those in a population at a given time may be very different in behaviour than the population ten- or twenty-years precedent to it. The economic and social environment influences people and their behaviour. Management and pensions guru Peter Drucker said, “When people try to understand demographics, they miss the point.” The problem is that when I attribute that to the common focus in demographics on a single individual attribute, “age”, which is not a sufficient statistic to explain people behaviour with characteristics such as gender, education, income, parental background, race, religion, location etc., all having an influence.

Focusing on individuals as consumers over their lifespans and workers over their working lives (rather than their mere numbers or their ages) is far more relevant from an economic and social perspective. 

While the core demographic statistics are important, what is far more important is the impact of populations as “consumers and workers” on GDP growth, GDP per capita growth, inflation, interest rates, equity premia, debt and capital flows. These macro fundamentals, in turn, have a significant influence on asset allocation and investment strategy. I will be exploring these relevant macro trends in future blogs. Getting a grasp on these is essential not just to understand how the future might pan out but what issues need to be understood and dealt with today. 

Source: UN Population Division