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Silver economy – Investing for population aging

 

February 2019

The composition of the global population is undergoing dramatic changes. The proportion of elderly people in the global population is inflecting and entering an extraordinary growth phase that should last until at least the middle of the century. This will likely result in a doubling of the senior population to over two billion people between now and 2050.

Further validation

The driving force in the graying of the global population is a moderating global birth rate coupled with an already aging population. January saw the release of an additional data point that further reinforces our conviction in our “Silver Economy” Supertrend: The Chinese National Bureau of Statistics reported that the number of births for 2018 totaled only 15.2 million, which translates into the lowest per-capita birth rate since the People’s Republic was formed. The local elderly population has already reached 12% of the total population, and projections suggest that the workforce will shrink by around 200 million people by 2050. It is announcements such as these that serve as a reminder of the inevitability of falling support ratios and the ongoing and increasing strain they place on healthcare and pension systems.

Percentage of world population 65+ (1950–2050)

Source: United Nations, Department of Economic and Social Affairs, Population Division (2017)

Opportunities related to population aging

While such demographic changes pose significant societal challenges, they also present sizeable opportunities for companies catering to the consumption needs and wishes of the elderly. In our view, investors positioned along the continuum of senior citizens’ wants and needs are likely to witness attractive returns, especially in the areas of pharmaceuticals and medical technology, senior-centric consumer goods, senior housing and care facilities as well as asset management and health & life insurance.

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