Within the next four decades, world population is projected to grow to over 9 billion people, according to the UN Population Division1. The highest growth rates are to be found in the least developed countries, with Africa experiencing especially strong growth. In Europe the total number of people will actually decline from 730 million to 665 million by 2050. Consequently, emerging countries are expanding their share of world population.
Population Growth and Ageing
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Population Growth
Growth is not homogenous in every region. China, the world's most populous country today, will see declining numbers in the first half of the century. By 2030, India will surpass China. Ageing Germany and "Young" Ireland represent different ends of the growth spectrum within Europe.
Another major trend is the fact that the way of living is changing. Urbanization has progressed rapidly in developing countries, and this has caused extreme socio-economic changes and a breakdown of traditional family structures. Since families in developing countries often provided for their elders, old age provision systems must be established.
Driving forces of demographic change
There are two major trends driving demographic change: declining fertility rates and increasing life expectancy. In the 1950’s women gave birth to an average of 5 children. Currently this figure stands at 2-3 and by 2050, it will drop to 2.022. Because of improved medical care and technical inventions, mortality rates have also fallen since 1950. As a result, global average life expectancy has risen from 46 to 68. In fact, according to UN projections, the fastest growing age group in the world is the one aged 80 and older.
The ageing process3
The so-called, "double ageing" process means that more people are living longer while fewer babies are being born, resulting in an increase in the median age. In 1950 the world population had a median age of 24, by 2050 the it will be roughly 38.5. This indicates a significant shift in the age structure of societies. The old-age dependency ratio compares the number of people 65 or older to the number of people between 15 and 64, and is used to measure a country’s ageing society. During the next 40 years, the old-age ratio is expected to nearly triple in Asia and Latin America, while it will double in Eastern Europe. In Northern America and Western Europe it will increase by some 80 percent.
Implications
The consequences of these developments are more pronounced in Asia and Eastern Europe. Developing countries are under the most pressure, as demographic change is fast approaching and governments have very little time to react. Provisions for old-age need to be set up quickly, and developing nations need to address the problems created by the ageing process at much lower levels of economic development than industrialized nations.
1 See Allianz Global Investors International Pension Issues 5/09
2 Population Division of the Department of Economic and Social Affairs of the UN Secretariat, 2009: World Population Prospects: The 2008 Revision, Medium Variant
3 For more details see also Allianz Global Investors "The Pension Sustainability Index 2009", International Pension Paper No.5, 2009