Why Investors Should Pay Attention To The Shift In Global Population Dynamics
WHY INVESTORS SHOULD PAY ATTENTION TO THE SHIFT IN GLOBAL POPULATION DYNAMICS
Wondering what the global economy will look like in the coming decades? The accompanying chart offers compelling clues.
A survey of the world’s population distribution reveals that more than a third of humanity lives in just two countries. Including other large developing nations like Bangladesh, Indonesia, Nigeria and Pakistan reveal that the majority of the world’s population lives in “non-Western” nations. As their population growth rates outpace those of developing nations, the share of the global population in developing economies is expected to rise substantially in the coming decades.
This trend will lead to a decline in the relative share of Western nations in the global economy, along with a similar loss of influence in global affairs. This shift could produce tensions among nations, especially between democratic and authoritarian regimes, highlighting the importance of geopolitical considerations in shaping the global economy.
For investors, select emerging markets offer tantalizing opportunities. Sound economic management and respect for the rule of law are key considerations in selecting markets for investment. The expected growth in emerging markets will provide an opportunity for developed nations to sell goods and services to these fast-growing economies. Emerging market growth will spur demand for a broad range of commodities, making the commodity complex an area that deserves investors’ attention in the years ahead.
However, major potential threats to global growth include geopolitical conflict and the widespread adoption of protectionist trade practices. Military conflict would have an obvious influence on global trade, and the use of tariffs could provoke a round of currency devaluations among nations that would hamper trade.
Economic volatility will accompany this evolution of the global economy, which will be also felt by markets, presenting both considerable risks and opportunities for prepared investors.
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