Demographic changes around the world are creating new opportunities for investors. Consider your portfolio in light of these trends, and you may want to widen your horizons.
By 2050, two-thirds of the world’s population is projected to live in urban areas. As cities gain residents, they accumulate readily available labor forces, which help keep wage costs low and facilitate rapid growth. But a bigger population also strains basic services, creating a pressing demand for infrastructure spending.
Not only will aging populations in many developed nations require more medical services, but rising incomes and urbanization in emerging markets may change everything from people’s dietary habits to their level of exercise. These shifts are projected to lead to a significant increase in “lifestyle diseases” such as heart disease, depression and diabetes. Overall, it’s expected that new health technologies and services will emerge to meet this demand.
As populations grow, so do economies. Emerging market countries contributed 75% of global economic growth from 2009 to 2014, and are projected to make up almost 60% of the global economy by 2030. Africa and Asia are expected to add 1.3 billion and 0.9 billion people, respectively, over the next 35 years—almost all of the population growth projected for that period.
The ability to deliver goods and services and receive payment through the platform of the mobile phone is a potential revolution in the ability to access a new and rapidly growing global consumer base. In some African countries, as much as one-third of all consumer purchases are made using a mobile phone.
By 2030, 93% of the global middle class—households that spend the local equivalent of between $10 and $100 a day—will be from emerging market countries, according to World Bank projections. Global providers of household goods, autos, and many other products and services (financial, legal, telecommunications) may benefit from this growth.
This diverse global expansion makes predicting the next big growth area more about seeking broad exposure to many different countries, rather than betting on one or a handful of rebounding former giants.
- To learn more about global investing, read the white paper “The Case for a Global Perspective.”
- Talk about your international allocation with a Schwab Financial Consultant near you.
- Keep in mind that trends can change, and the future is unknown, so investing in opportunities created by evolving global demographic trends still carries risks.