Saturday, July 29, 2023

"All the people, so many people: most of the growth in emerging markets"

From Bond Vigilantes, July 11:

Today is World Population Day, an event accompanied by some mind-blowing stats. Whilst demographics shift too slowly to matter in a given year, when viewed over a longer time horizon they are a megatrend that investors cannot ignore.

First to note is that the world population clock recently ticked past the 8 billion mark, double the number of inhabitants in 1973 (according to the United Nations). That spectacular growth over 50 years was driven by hard-won improvements in healthcare and longer lifespans.

Second, India has passed China as the world’s most populous country this year. One of many movements occurring among the relative sizes of the largest countries.  

Third, over past 20 years population growth has slowed further from peak global population growth recorded in the 1960s at around 2.3% per year. Since 2003, population growth has slowed in many countries characterised by ageing populations, while on the other hand many countries continue to grow rapidly on the back of success in meeting their development goals. Trends in this multi-speed world can create opportunities for emerging market investors.

Fourth, the global population is forecast to continue its growth until a peak at around 10 billion people at the end of the century, according to the United Nations. But predictions about the point when the global population will begin to fall are very sensitive to hard-to-predict demographic trends in many large frontier markets.

Fifth, migrants get a lot of coverage in the press, being too often presented as the scapegoat for politicians trying to divert attention from their policy failings. As defined by the World Bank, only 2.3% of the world population are living abroad (about 184 million people, of which about 37 million are refugees).

Changes in the table
The largest 20 countries by population are home to 70% of world population. That list has long been dominated by emerging markets, and is forecast to become more so over the next 20 years. For example, Japan and Germany are forecast to drop down the list, while Egypt, Vietnam, and Tanzania are forecast to climb into their places. With population size typically comes greater national income, but there is also potential to secure a demographic dividend, a period when a big boost economic progress can occur....