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Aging Population a Challenge for Businesses, Governments

Aging Population a Challenge for Businesses, Governments  Aging Population a Challenge for Businesses, Governments
According to analysis by the WEF, the retirement savings gap across eight major economies is growing by $28 billion every 24 hours and could reach $400 trillion by 2050–around five times the size of the global economy today

Changes in global demographics, world population, density, ethnicity, education level and other aspects of the human population, will bring about significant social change, and therefore challenges and opportunities, for both government and business.

This megatrend underpins other structural shifts, such as technological development and shifting economic power. While the changes will vary by region, they will have a profound effect on local and global markets and societies, MorningStar online reported.

According to the United Nations, the global population is forecast to increase by over one billion by 2030, with most of this growth coming from the emerging markets.

By 2050, the UN estimates that 80% of the global population over the age of 60 will be in countries that are currently deemed to be ‘less developed’.

Japan is the only country in the world where 30% of the population is over the age of 60. The UN’s latest demographics report forecasts that, by 2050, this will be the case in 55 countries.

People will be living longer in retirement, which will result in the need for large-scale changes in government policy. This will also create a strain on healthcare services and providers, with many nations enforcing laws to ensure the elderly are properly cared for.

According to analysis by the World Economic Forum, the retirement savings gap across eight major economies is growing by $28 billion every 24 hours and could reach $400 trillion by 2050–around five times the size of the global economy today.

  Producing Fewer Children

The world is having fewer children–particularly in wealthier and educated sections of society. This potentially has far-reaching consequences for business, including lower productivity, less labor-force participation, and less investment growth.

Younger generations will be increasingly burdened with the expectation of looking after the elderly, which in turn could further reduce productivity.

The impact of changing demographics is far-reaching—from the demand for products, to changes to the workforce and family structures. While many businesses are particularly adept at identifying the threats and opportunities of such change, they don’t, after all, happen overnight, governments may find the process more challenging, particularly if it means making unpopular policy changes that could influence voters.

  Key Changes

Here are some of the key changes that may impact investors in the medium to long term:

- Healthcare spending is set to rise by 8% of GDP each year between now and 2040. That’s around $3,400 billion every year.

- There will be a renewed focus on saving for retirement and finding effective ways of drawing an income when people retire. As a result, there could be a greater need for financial help, and the rise of robo-advice solutions.

- As populations age, it becomes increasingly likely that businesses will use technology to plug the shortfall in labor supply. Robots are more productive, they don’t sleep, or get sick or need performance reviews, although they may have technical problems. As a result, there will be a greater need for skilled jobs such as data scientists.

- Consumers are increasingly focused on what they eat, how they are eating it and how it is produced; creating significant changes in the food supply chain. For instance, organic foods sales in the US has risen 224% from 2005 to 2016. Fresh food is being preferred over processed foods and products with specific health related benefits, such as avocadoes and berries, have seen outsized growth. Consumers want their food to be more convenient, resulting in more online delivery, meal-kit solutions and convenient snacking options at supermarkets.

 

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