A big deal

Demography is perhaps the single most important investment theme over the next half century. Many of its implications will begin to bite much sooner. Three trends are happening simultaneously. First, global population is expected to expand by nearly 40% through 2065. Second, population growth is slowing globally as fertility rates drop. By the end of the century, births per woman in all regions will be below the natural “replacement rate”. Third, and most important for investors, working-age populations will be shrinking outright in Japan, much of Europe and, most dramatically, in China. This is likely to keep economic growth and financial asset returns low by historical standards.

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