Nevermind Tomorrow: What Will 2050 Look Like?

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January is traditionally a time when we look forward to the future.

Maybe we make our New Year’s resolutions to eat less, exercise more and be a nicer person — well, the first two anyway. It is also a time when we in the metals media often look forward and try to discern what the year — or even years — ahead may hold.

So drawing on a thought-provoking report by HSBC entitled “The World in 2050,” we thought it may be fun — interesting even — to muse on what the run-up to the middle of this century may hold.

This is more than just an academic exercise; for many corporations, long-term forecasting, while prone to numerous caveats, is an integral part of long-term strategic planning for businesses.

Long-term demographic changes, for example, can have a profound impact on marketing, revealing growth opportunities in what may appear relative backwaters today. Likewise, political and demographic changes can have a profound impact on an issue close to our hearts – security of material supply.

Let’s Talk Boys and Girls

The first section we’ll discuss is demographic changes because these are probably the most accurate to forecast, based as they are on current population sizes, cultural/religious attitudes towards birth control and relative levels of prosperity.

From an economic development point of view, population profile is as (if not more) important than population size. The proportion of working-age people in mature economies like Europe, Japan and China will fall relative to the overall size of the population by 2050. Meanwhile, the bank believes the population of many African countries will double by 2050.

Nigeria, for example, will have almost as many people as the US, and Ethiopia will have twice as many as Germany. Pakistan will have the sixth largest population in the world; even though it and many African countries remain relatively poor, they still represent massive sales opportunities for products and services currently doing well in highly populated poor countries like India.

By contrast, the Japanese working population looks set to contract by 37 percent, underlining the severity of risks to their debt and health care systems repeatedly raised in the business press. Other mature economies are facing the same challenge: the eurozone faces similar problems with working population declines of 29 percent in Germany, 24 percent in Portugal, 23 percent in Italy and 11 percent in Spain.

How will sovereign debts be paid off by a shrinking working age population? Even today’s emerging markets face the same issue. Russia’s working age population is set to contract by 31 percent by 2050. A provocative graphic by China Profile projects that 31 percent of all Chinese will be above age 60 in the year 2050, compared with less than 15 percent today. Not only that, but a steadily falling percentage of a steadily falling population will mean many fewer workers will be available in future decades to deliver the growth in prosperity the country needs as its population ages.

While population growth is not the sole driver of national GDP growth, it is a very significant contributor; an exception, though, is clearly China with a contracting total population yet rising productive population as agricultural workers move into the factories.

The next part of this short series looks at which countries are expected to be the chief beneficiaries of population growth, and which factors will drive substantial increases in national wealth.

–Stuart Burns

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