Almost every country faces a demographic challenge, whether it is rapid ageing or a fast-growing population needing jobs. The world’s population is expected to rise from 8 billion towards 10 billion by 2060 but many countries will see shrinking workforces.

That has implications for businesses. People will buy different things in different ways, but when markets shrink, companies can no longer rely on higher volumes

India looks set to overtake China as the most populous nation by about 2025, but the epicentre of population growth will shift to Africa in coming decades. Nigeria, Ethiopia and Egypt will be in the ten most populous nations by 2050 alongside India, Brazil, Bangladesh, Indonesia, Pakistan the US and mainland China, whose population will start to fall after 2030.

Just over half the world’s population lives in urban areas, and this is rising, especially in Africa and Asia. But mid-tier cities are growing faster than mega cities, which has implications for logistics and distribution, and for the environment. However, increased working from home makes cities less attractive - potentially affecting property prices.

Ageing will be the biggest social transformation this century. By 2050 there will be more over-65s globally than under-15s. But Japan shows this does not necessarily mean a shrinking labour force, and as people work longer, they accumulate more wealth.

And while an ageing population needs healthcare, demand for healthcare will likely rise fastest in younger nations such as Nigeria, Egypt, Turkey and Indonesia: as people reach 40, medical conditions tend to start emerging.

Policymakers face other dilemmas too – such as how to find jobs for the 840,000 Indians or 307,000 Nigerians who join the job-hunting pool every month.

Education can be a game-changer for some nations, raising labour productivity and potential growth. Egypt, Argentina and Brazil stand to gain, but Indonesia, the Philippines, India, Ghana and Mexico need to do more.

Women are working more, which means fewer children but higher household incomes and spending.

Shrinking households are a particular trait in North Asia: 33 per cent of South Korean households are expected to be single-person by 2030. This changes spending patterns – more ready-to-eat meals, for example, and using convenience stores rather than hypermarkets.

We expect similar trend in mainland China soon. The combination of an ageing population, children leaving home and more working women has led to the growth of ‘empty-nesters’. They are the largest, fastest-growing consumer market globally. By 2030, more than 64 million Chinese households are expected to earn more than USD50,000 a year, buying higher quality products – whether travel or fitness – at higher prices.

These trends are unstoppable. Companies need to understand this, or face the prospect of losing market share to competitors that do prepare for demographic change.

First published 19 February 2021.

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